Managing the books is an important part of running a business. With attention to a few details, an owner can ensure the business’ credit is in excellent shape. The U.S. Small Business Administration recommends a few specific strategies:
Create a business credit file
Dun & Bradstreet should have a record of a business’ credit file. It can be reviewed or established at iupdate.dnb.com. Review and update the file periodically so lenders, vendors and suppliers have all the information needed to make an informed decision. Key points are revenue, location, headcount and any lawsuits.
Establish a business credit history
New businesses may be funded with personal credit, but they should establish business credit as quickly as possible to build a history. This can include operating a commercial bank account and attributing expenses to the business.
Keep current on bills
A key factor in obtaining a positive credit rating is consistently paying bills when they are due. Entrepreneurs should be cautious about overleveraging the company or using every last bit of credit. A credit rating is determined through many factors, though, including industry and employee count.
Stay on top of your credit file
According to Dun & Bradstreet, credit scores can fall sharply, with about one-third of businesses experiencing this over just a three-month span. It’s best to know your credit score has changed before a customer or lender does.
Monitor customers’ and vendors’ credit
While a company should be concerned about its own credit, it should also consider how much credit to extend to its customers and vendors. D&B can also be used to view other companies’ credit files.
