There are some ways to help manage your business credit so that your business can look favorable with suppliers, banks and so your cash flow stays positive. Here are some tips to help:
- Establish a business credit history. You can easily do this by putting your expenses (such as business cell phone lines for example) in your business name.
- Cash flow management: Good credit = better financing. Delayed financing is a common reason for why businesses fail. If a business has a poor credit rating, banks may increase credit card interest rates from 9% - 18% and loan interest rates average 8% - 12%.
- Suppliers look at your credit and decide how much credit they are willing to extend to you. Good business credit can ensure you get the supplies you need under the best possible terms and frees up more money for your business.
- Make better credit decisions on customers: Knowing your customers credit enables small businesses to give better terms to creditworthy customers and avoid doing business with customers who are slow payers. These can greatly increase cash flow.
- Pay bills on time: In order to improve your credit scores and build a positive payment history, the most important thing is to pay your bills on time.