7 steps to a heavenly commercial credit score

Those who don’t pay attention to this increasingly important indicator of their firm’s financial health are missing a trick.

Commercial credit scores are a key part of the application process for everything from bank loans to rental agreements and utility packages.

They are also important for new business generation; many tender processes now take a potential supplier’s score into account before agreeing a new relationship.

Businesses are much more likely to be able to negotiate lower prices and better terms if they are classed as a “safer” bet than other firms.

There are several steps that business owners can take to improve the way they are perceived:

1. Check your own commercial credit score every six months.

It’s incredibly important that you keep on top of your credit score on a regular basis. Analyse your own report every six months and ensure it reflects your circumstances.

2. Manage your invoices efficiently.

Monitor your customers’ payments and take action if they are falling behind. By checking customers’ payment performance information you can help protect your business from potential cash flow issues by anticipating any potential delays in payment and planning for them so you can continue to maintain your own commitments.

3. File annual returns and financial accounts on time.

Late filing of accounts can be a sign of financial distress. If you know your accounts will be late, consider filing partial rather than full accounts, so that any potential misconceptions can be rebuffed.

4. Avoid County Court Judgments (CCJs).

If a CCJ does occur, ensure it’s settled within the month. In the past, one CCJ would not necessarily involve the withdrawing of credit lines, but it is more likely to have a greater impact on your credit score in today’s financial climate.

5. Keep an eye on your customers.

If financial data on a business is scarce, consumer data is a valuable indicator of financial health for small and newly formed businesses.

6. Tell your utility suppliers when you move premises.

Ensure any utility bills are paid in full as outstanding bills will go against your record.

7. Make sure your business is on the map.

If your business falls below the radar you could struggle to gain access to credit and services as your existence cannot be easily verified. Non-limited businesses should consider registering with a credit reference agency or a business directory such as Thomson.

Source: SME Insider

Post date: 24 Jul 2015

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