You work hard to keep your business flourishing. You take care of your employees, serve and delight your customers, and regularly evaluate how well your marketing and sales strategies are performing. But, what about your company’s credit health? How often are you checking on it, and do you have a plan to improve your company credit if it needs it? Here are a few tips to keep in mind as you operate your business.
Check your business credit score.
Your business credit score, which typically ranges from 0 to 100, is influenced by many factors, which can include:
- Number of trade experiences
- Outstanding balances
- Payment habits
- Credit use
- Trends over time
- Public record recency, frequency and dollar amount
- Demographics, including years on file, business size and Standard Industrial Classification
Correct any mistakes.
Once you get into the habit of checking your score, you should also verify that the information contained within the report is accurate and up-to-date. Any errors, no matter how small, should be corrected immediately.
Establish business credit.
If your credit score isn’t looking so hot, or your business is a little on the newer side, you can give it a boost by opening lines of credit, such as credit cards and loans. Small business credit is established when it’s used — and used well. This means loan or card payments must be paid on time, as your history of payment behavior with creditors plays a huge role in developing your business credit score.
Limit credit usage.
While you need to use your small business credit on a regular basis, you also need to keep your debt levels manageable and reasonable. If you owe large amounts of money to a variety of banks or other lenders, this can keep your credit score lower than you’d like. Revolving debt, in particular, can be troublesome for your small business credit score.
Avoid closing credit accounts.
It’s tempting to close a credit account once you’ve paid off the balance — after all, it seems like it makes good business sense to remove sources of future spending — but the truth is that this can negatively impact your business credit score. Additionally, this can influence the amount of credit you have at your disposal, including future credit.
Consider invoice factoring.
If your small business has unpaid customer invoices, you can turn them into fast cash with invoice factoring. And, invoice factoring has an added bonus. It can help improve your company credit! Banks look at past payments to invoice factoring companies favorably — so this can be another tool you can use to improve your small business credit.
Interested in invoice factoring? Learn more about Keystone Capital Funding’s invoice factoring and purchase order financing services.