We have all experienced the impact that a personal credit score has on our lives. The ability to apply for credit cards, loans and mortgages is hinged on our credit score, and it’s the same for our businesses. Your business credit score determines if suppliers will trade with you if you can secure new funding or even a successfully apply for a business credit card. Your business credit score can impact the growth of your company. Your score won’t look after itself, you need to nurture it, and if you do, you will feel the benefit.
Start by accessing your business credit report, unlike personal reports these are not free. You should carefully review your credit report and ensure that every piece of information is correct. If you have been issued with a CCJ, clearing the amount within 28 days of issue means that the CCJ will be cleared for your report. A CCJ can severely damage your ability to secure any funding; it suggests that you are delinquent when meeting payment dates within agreed terms. If you can clear the CCJ, then it is beneficial to do so. Regularly check your credit report to catch any mistakes before they do any lasting damage.
Every application that you make appears on your credit report, whether you are successful or not. Too many unsuccessful applications can lower your credit score, making you appear as a bigger risk. Wildly applying for credit also doesn’t look good, it can make you appear desperate for funding, raising questions about your financial stability. Be wary when applying for lines of credit, only apply when you are confident of being accepted.
Your credit score is affected by the way that you run your business. There are so many reasons to pay your bills on time, not only does it help you build healthy relationships with suppliers it can boost your credit score too. That doesn’t mean that you shouldn’t try to negotiate longer payment terms though, the long-term allows you to manage your cash flow effectively. It shouldn’t be all one way; your customers should be encouraged to make a payment on time too. This starts with a clearly defined credit control procedure, ensure that payment terms are outlined in an agreement, and the agreement is signed by the customer before any service/products are issued. There should then be a procedure for the issue of invoices, chasing up the invoice and the protocol if the payment is overdue. The receiving and issuing of regular payments show that you can manage your finances responsibly, without debt, improving your credit score.
Late payments can be seriously damaging to both your business and your credit score, try to encourage customers to start standing orders or direct debits and aim to clear any overdue accounts before the end of the year. If your business struggles with a lot of late payments or evasive customers, a collection agency like Commercial Domestic Investigations can help your business to recover any unpaid debt. We take the time to understand your business and your clients to handle your credit control professionally and effectively. To speak to a member of our team, contact us on 08444 159200, use our contact form or email firstname.lastname@example.org.