If you own a business, then you already know that it is important to maintain your own credit and that of your company. Unfortunately, they can become entangled extremely easily. Therefore, it is vital to keep these tips in mind to keep your business from becoming a credit risk.
Always Pay Your Bills on Time
Whether you are paying your company’s bills or your private ones. Always make sure that you pay your bills on time. If money is going to be tight, then consider paying your business bills early as many vendors will give you a discount if you pay before they issue the final invoice. You may discover that you even earn extra points on your business credit score by consistently paying your bills 30 days in advance.
Choose Your Vendors Carefully
While most businesses want to do business with others who consistently offer the quality products at the lowest price, make sure to consider asking them to report your payments to credit agencies when setting up the contract. Most will be glad to do so as they will be anxious to make you a happy customer. The result is that when you pay on time or early, then you are building your company’s credit rating.
Consider Your Debt-to-Asset Ratio
Just like with your personal expenses, try to keep your debt-to-asset ratio below 40 percent. This number compares the company’s debt to its total assets. You can usually find these numbers by looking at the company’s cash flow sheets. Bankers and others count on scores determined by credit agencies to recommend who to give money to and the scores are so accurate that they can 96% accurate bankruptcy risk score to every business.
Get a Company Credit Card
Using a credit card can help build your company’s scores as long as you pay them off regularly and on time. Keep in mind that you do not want to carry a high balance as you will have to pay additional interest just like on a personal credit card. It will also count against your debt ratio. Yet, it can be a convenient way to keep track of all your company’s expenses as you can just get them off the credit card statement each month.
Consistently Use Credit over Time
Businesses who borrow small amounts of money and pay it back as promised or early show that they can be trusted to use money correctly. Therefore, they get a higher credit score than those who pay late or inconsistently. Make this work in your favor by borrowing small amounts of money and paying it back early. When companies like creditriskmonitor.com pull your business’ credit report, then they can recommend that money be loaned to you.
Following these simple tips can help keep your business credit score in great shape. Then, your business does not become a credit risk. Take steps to improve your business credit score today.
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