Supplier Credit Checks & Deposits: Mistakes Ohio Buyers Make
The short answer
When a supplier fixes your price, it buys wholesale power to cover you — so it needs to know you'll pay for the whole term. Suppliers therefore run a credit review on larger and multi-year contracts and may ask for a deposit, prepayment, letter of credit or parent guarantee. The common mistake is discovering this after a price is accepted: the quote expires while the credit request is sorted out, and you re-price in a different market.
Mistakes to avoid
- Sending credit information late. Share the legal entity name, federal EIN, and (for larger deals) recent financial statements before pricing day.
- Using the wrong legal entity. The contract must match the name on the utility account; mismatches stall enrollment.
- Signing for a newly formed entity without a guarantee. New LLCs often have no credit file; a parent guarantee can avoid a deposit.
- Ignoring term length. A 36-month contract carries more exposure than 12 months, so credit requirements rise with term and volume.
- Not asking who holds the deposit and how it's returned.
- Forgetting the utility. Some utilities can require deposits for delivery service too — a separate question from supplier credit.
- Overlooking the supplier's own credit. A supplier default leaves you on the utility's default price. For long terms, ask about the supplier's financial backing and PUCO certification status.
What suppliers typically look at
| Factor | Why it matters |
|---|---|
| Legal entity, years in business | Identifies who's liable |
| Payment history | Late payments raise risk |
| Size of the contract (volume × term) | Larger exposure, stricter requirements |
| Public credit ratings or financials | Determines whether collateral is needed |
| Industry and seasonality | Affects cash-flow risk |
How to prepare
- Put a one-page credit packet together before requesting prices: legal name(s) exactly as on bills, EIN, address, years operating, contact for accounts payable, and financial statements if the deal is large.
- Ask each supplier to state credit terms with the price.
- For multi-site deals, confirm whether each location's legal entity is covered.
FAQ
Do electricity suppliers run a credit check on businesses?
Many do, especially for larger or longer contracts. Small commercial offers may only require standard terms.
What is a letter of credit in an energy contract?
A bank guarantee that pays the supplier if you default — used for large or long contracts instead of a cash deposit.
What if my supplier goes out of business?
You're returned to the utility's default service and can sign with another supplier; watch for notices and act quickly.