Since the recession of 2008, many startups have simply turned to credit financing in order to keep their business afloat. However, maintaining a business on borrowed money can become a handful sometimes, especially for novice business owners. If you’re one of those who needs a hand at managing your business credit, here are four simple tips to follow.
Remember to Pay Bills on Time
Perhaps the simplest way to maintain a good credit score is simply to be punctual in your payments. This creates a consistent routine in payments, thus improving your overall commercial credit rating. To do this, it’s important to not get greedy with loans and overextend your business’s expansion.
Consider Signing Up For a Credit Monitoring Service
Credit monitoring services can fact-check your reports for any discrepancies and inaccuracies, as these may point to a critical security breach. In recent years, such breaches have commonly grown with the records of millions exposed and their credit misuse. Credit monitoring services provide protection from such a negative outcome, but each service comes with its own strengths and weaknesses. It’s advisable to check out their websites, track records, and use reliable sources such as these credit monitoring reviews from Crediful.
Vendors’ Credit May Affect Your Own
On average, 33% of businesses experience a downturn in their credit rating every quarter. This will naturally extend to affiliated businesses, so keeping a close eye on the credit score of your suppliers will give you a good handle on how well they can maintain your supply chain and hold up their end of the contract. Determining the business credit score of a potential vendor will also help you decide what kind of invoice terms you should extend. With proper preparations, you can minimize the risk by checking their score before agreeing to payment terms.
Cultivate Your Business’s Credit History
Many startups make the mistake of using their personal credit records for their business. Tax laws aside, it is better to keep business and personal credit separate, as this makes bookkeeping easier to manage. It’s also not advisable to gamble your personal credit score should your business fail and result in bad credit. Establishing another credit history for your business can be done by opening a bank account to pay the business’s expenses under the company’s name.
With a bit of clever management, supplemented by these four tips, you can comfortably keep your credit-financed business running strong for years to come.