Business credit is the lifeblood of any company whether large or small. By establishing and maintaining a positive business credit profile you’ll avail your business to lower interest rates, more options for loans and notes as well as numerous other credit advantages.
There are high numbers of business owners that don’t properly understand all of the facets of achieving a strong credit rating so we will cover some of the main points here. Following, we have provided a printable business credit checklist that can be downloaded below to assist you with putting together an organized approach to managing your business credit rating.
The first and most simple steps that many business owners overlook are identity and consistency. Factors of business identity are crucial to establishing business credit. If your business has evolved over a period of time you’ll need to be sure that your business identity is consistent everywhere. Changes to address happen from time to time and that is natural. Be sure that your current address and contact information is on file everywhere.
Next, if your business has been around for a long time you may have changed the name, or began shortening the name used on certain documents. Take for instance a business originally named Jones Hardware and Service Company. Over time this name could be shortened to Jones Hardware Co, or just Jones Hardware when completing a company profile online or when completing a credit application. This is very common. The first exercise in obtaining the good credit rating and business reputation you deserve is to be certain that all of your business documentation, loans, accounts and other items all contain the same form of the business name.
Monitor your business credit rating. It can’t be said enough that what you don’t know WILL hurt you. Many unsuspecting business owners pay higher interest rates and some are denied credit based on something in their business credit report that could have been corrected and/or avoided. When changes to your business credit occur it is important that you’re aware of the change and the potential impact to your company’s access to affordable credit.
The following steps for maintaining a positive business credit rating are more obvious. Keep all of your accounts, licenses, tax filings and other thoroughly documented identifying records current.
Pay the bills on time and fulfill your government responsibilities on time. It is also highly advised that you keep all of your accounts payable in order and on time. Some vendors will offer a discount for early payment also. If you must micro-budget accounts payable and expenses during lean times, it is advisable to pay in time so that no invoices or bills are paid in excess of 15 days past due.
If your business stands to risk paying late fees or finance charges on late items during periods of low cash flow, it’s recommended that you make every effort to avoid these additional costs whenever possible. Nothing can cripple the business cash flow more than compounding expenses as a result of being low on cash in the first place.