Just as personal credit has a huge impact on financial freedom, having the best business credit scores and indexes can help you get competitive financing rates, achieve greater success and growth for your business. In order to have great credit, you need to fix how your business manages its finances. Here are some ways to perfect your money management strategy and avoid having to fix business credit down the line.
- Hire a bookkeeper or reliable accounting software so you can keep track of revenue and expenses. Tracking where your money goes will also help you set up a budget and have less delinquencies on credit.
- Anticipate future expenses and obstacles, factor these projections into your plans. If you know your receivables will be late make sure to have credit available to cover the expense or collect more upfront from the account, your are servicing.
- Keep track of invoices – account receivable losses can be a killer to your bottom line and impact accounts payable. If you fall behind on paying creditors your business credit will take a major hit. If you must be late on payments make sure to pay late on lower debt accounts rather than the highest debt creditors.
- Maintain a separate business account. Nothing makes financial tracking harder, then having your personal expenses mixed in with business expenses.
- Don’t overspend and assume your growth will continue at a high pace. Things can change on a dime in the fast-paced world of business, so you need to be prepared. With proper financial planning you can allocate funds where they’re supposed to go and save on unnecessary or premature purchases.
- Be careful before expanding too quickly. Growth is exciting, but if you step on the ignition too quickly, the business can end up in financial trouble and unable to maintain quality service and products to your accounts.
- Monitor and maintain your business credit reports. If you do not see as many creditors as you know your firm has, it could be they do not qualify with the credit bureaus for reporting. Just because you have vendors it does not mean they will update to the bureaus. Speak with business credit building experts to find out what needs to be done to build a solid low risk business credit profile. At that time, you can also review an negative information and discuss how they can fix your business credit. Creditworthiness plays a big part in growing a strong and viable company.
Having a strong business means being smart with your money. You can avoid the hassle of fixing business credit and dealing with debt by educating yourself on how to manage cash flow and keep your credit profiles in the best possible position.