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Letters Of Credit

If you have a major order, you can get suppliers on your side.

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A letter of credit from a major customer can be used as a formof security in establishing relationships with suppliers. Forinstance, if you're starting a business manufacturing gardenhoses, you could get a letter of credit from your biggest customerwhen the order is places, showing that the customer has contractedto buy the finished hoses. The material to make the hoses is thenpurchased using the letter of credit as security...and youdon't have to put up a penny to buy the material.

Excerpted from Start Your Own Business: The Only Start-Up BookYou'll Ever Need

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