Your business is unique, but the problems that you encounter aren’t going to be. There are common issues that tend to crop up for small companies regardless of their industry or volume of sales. Some of those common issues include late payment from customers, fluctuating supply line costs, and the credit issues that both of those problems can contribute to. If you’re working on getting your business credit under control, the good news is that there are a few best practices that can help you get everything under control, and they’ll also help you manage your credit well into the future, even when times get tight.
No Credit History
This isn’t a quick issue to fix, but it is one that you can often find quick relief for. There’s no way to conjure a credit history out of thin air, but there are some ways to begin establishing it. You can request vendors and utility providers to report your payments to the credit bureaus to work on establishing a history. Another option is to apply for a credit card or line that doesn’t require a previous credit history as long as you can confirm your business income. Using that credit resource to establish a pattern of borrowing and paying off small amounts can alleviate cash flow issues while you take the opportunity to build a score that will get you larger loans later, too.
Using Personal Credit for Financing
Another headache a lot of business owners fall into is taking out personal loans or credit line withdrawals and then investing the money in the business. This is a problem for two reasons. For starters, it can drag down your personal credit score as you take out more and more debt. More importantly, it doesn’t help you establish credit. It also doesn’t help improve a low business credit score, because it doesn’t appear on your business credit report even if the debt is paid back in a timely manner. In some cases, following the right procedures can even create a larger personal tax burden for yourself and your family.
Failure To Utilize Credit Perks
Often, credit cards and cash draw lines come with perks like zero interest for a set grace period or rewards that can be used for discounts on purchases. If you ignore these features, you don’t get everything you paid for when you do pay interest, which is pretty much the same thing as leaving cash on the table. If your credit line gives you a grace period, use it before you wind up in a cycle where paying a debt leaves you low on cash flow, requiring you to take out more for your next expense. Take control of your business credit now and into the future.