Home > Passive Credit Repair > 4 Must-Dos for Good Business Credit

4 Must-Dos for Good Business Credit

Posted on June 12, 2011

In order for a small business to become financially successful, it has to be able to stand on its own two feet. While most businesses need to rely on the owner’s personal credit history and score before a business can be established, there must be a point of separation to ensure the stability of the business. If a business can not establish or repair its own line of credit, there is a chance the business will not succeed financially or otherwise. Bad credit can mean other vendors and companies will not want to conduct business with your small business. Your business credit must be trustworthy, especially in light of the current economy of the nation.

In order to develop and maintain good business credit, it is important for a business owner to make the effort to keep credit in good shape. Here are 4 of the basic rules for maintaining good business credit:

Take the Personal Out of Business
Once you make the decision to separate business finances from personal ones, it is essential for you to not look back. Keep records separate and utilize money in the same manner. Develop a solid system for keeping the business accounting of its own accord and not extending credit from the business for personal reasons. Doing so can either jeopardize your business profitability or your personal liability.

Be Diligent About Accounting
One way to ensure better credit for your business is to always pay your vendors and creditors on time every single month. Going into debt or overextending your credit is the downfall of many small businesses. Once you fall behind in bill payments, the business credit record is marred and it can be difficult to spring back from bad debts. It also can hurt your future relationships with vendors who may refuse to work with you if bills continually go unpaid. The more timely your bills are paid, the more reliable your business will appear to be to other vendors and creditors.

Develop the Right Business Credit Connections
Today there are many ways to finance a business and not all of them are good. For instance, you can not solely rely on credit cards to pay for business debts, especially if your profits are not steady enough in the early stages. It may be a better option to consider your local bank where you have a loyalty as well as other lenders who are reputable. The way to secure the financing you need for working capital or for growth is to create a business plan using realistic calculations and factual data to prove your small business can succeed.

See the Big Picture
Businesses that grow slowly and pay attention to detail are the ones that find success most often. Those small business owners that rush out to buy every new piece of equipment and spend profits recklessly will likely find it harder to keep making ends meet. It is important that a full business plan be constructed and updated to reflect how business is actually going. By having a visual reference guide to follow, owners can be more efficient in their spending. By seeing the big picture, you’ll understand where you are and where you need to be at all times. This will help you from ruining the business credit before it is ever really established in the first place.

Business credit is a very important aspect of a successful business. There are was to maintain great business credit even during the early stages of the business growth phase. Owners need to dedicate the time and effort into ensuring the business is living within its means and using credit wisely.

Similar Posts:

Comments are closed.