Five Ways to Improve Your Business Credit Score Rating

on Saturday, 13 August 2016.

Your business credit score may seem insignificant most of the time, but if you apply for a loan or buy goods on account most companies of any size will check your company credit score.
If your credit score is too low companies may refuse to even deal with you and banks often refuse to lend money, you may also find some types of customers will also refuse to purchase from you.  So we have put together this guide on how to maintain and improve your business credit score.  This article is aimed at improving your business credit score from the ground up and the methods we talk about are ethical business practices. 

It all starts with the most important thing and that is getting in the money in that is owed to you, this may seem obvious, but it is the most important thing in this whole guide.

Improving Business Credit Rating


Think Ahead
Looking ahead and planning is important, when things are going well try to put aside a cash float to cover for things such as tax bills and maintenance expenses.  For most businesses the worst expenses seem to come at the worst time, however you can use this to your advantage. 
Simply put aside some cash during your more profitable months, so when you have quieter months you aren’t stuck for cash, furthermore, if you manage it correctly, you should be able to use this amount instead of an overdraft. Also think ahead for any large expenses that may be looming or even having to buy a large quantity of stock to fulfil an order.
Always remember to pay back your cash float as soon as you can so it is ready for use next time.

Planning well ahead in any business is important, many people are scared of planning in case it doesn’t go according to the plan they have set down on paper.  However the whole idea of a plan is to give you direction along the way and you can see quickly whether you are on track or not, there is no problem with changing the plan if necessary. 
It is always advisable to seek professional advice when planning, especially financial goals, but if you do nothing else sit down with a pen and paper and sketch out a few goals and ideas.  Remember to put dates next to the goals so you can see how accurate they were and make adjustments to improve accuracy.  Always plan your cash flow, it will not only show potential problems but give you peace of mind.

Pay Before Time
One of the methods used to calculate your credit score is ‘days to pay’ that is how long it took you to pay the bill from when it became due.  The quicker you pay the better your score will be.
Paying your bills just in time before you get a red letter isn’t a good situation to be in it rings alarm bells and can give you a bad score very quickly.  Always pay well before time.
Here’s how it works - paying before time impacts positively on your score, if you pay exactly on time at best your score will stay the same at worse, it could be impacted, if you pay after time this will negatively impact your credit score.

Log Your Debtors & Creditors
Make sure you log and keep up to date a list of your debtors and creditors, as a minimum you should include –

  1. Brief description
  2. The total amount due/owed
  3. Due date

Keeping a debtors and creditors list allows you to follow up people that are late paying you and acts as a useful memory jogger of bills that you will have to pay and when.
The three most likely reasons someone has not paid on time is they

  1. Have forgotten
  2. Can’t pay you
  3. Won’t because of a failed commitment from your end

Be very careful to make sure the latter doesn’t happen, it’s all too common. Ensure you deliver as per the contract agreed with the customer.  Of course, there are times when things go wrong and you are not able to meet the commitment, in that case you should communicate with the customer and come to a decision.  Most customers do like to be kept informed at intervals through the process, especially if they have not dealt with you before.

Last but not least…
Improve Your Cash-flow, Cash is king.

Remember, it is difficult to regain a good reputation, the same goes for credit scores.  Once you get a black mark this will remain on record at best for a long period of time, sometimes even permanently.  A good credit score will make your life a whole lot easier and often put you ahead of competitors.  In addition, it helps you to maintain good business practices and an incentive to keep the business finances well in hand. Checkout our Company Credit Reports page

Marketing Services

In addition to business credit checks we provide a wide range of business services including business to business data cleansing and a wide range of other business services.