As a business owner, one of the most important items on your watch to keep track of is your company’s credit. A strong credit file can mean the difference between sustainable success and becoming an unfortunate statistic. Here are five simple steps you should take to manage your business credit.
- Find out if you have a business credit file. Small business owners should first know if they have a business credit file with Dun & Bradstreet. You can find this out by visiting http://iupdate.dnb.com/iUpdate/mainlaunchpage.htm.
If you determine that you already have a business credit file, be sure to review it completely, and update the information to ensure that those looking at your business credit (such as vendors, suppliers and financial institutions) are making decisions based on complete and accurate information.
If you don’t have a business credit file, you can establish one by applying for a D-U-N-S® number. Small businesses should apply for a D-U-N-S® number, a unique business identification number, as soon as they start their enterprise to start the process of creating a business credit file.
- Establish a business credit history. A best practice for a new small business owner is to establish a credit history by putting expenses (such as a business phone line) in their business name and using a commercial bank account to pay their bills.
- Pay bills on time – and understand other factors that influence your credit rating. Pay your bills on time to improve your commercial credit scores and build a positive payment history. Be careful not to overextend your business, and be sure to use any line of credit judiciously. Other factors that go into a credit rating include type of industry, revenues and number of employees.
- Monitor your business credit file and keep it up to date.According to D&B, the credit score of about one in three businesses declines over just a three-month period. You should keep your credit file current and accurate, reflecting changes such as location, number of employees, outstanding suits/liens and revenue – all of which impact your credit rating
- Monitor your customers’ and vendors’ credit.Monitoring credit reports that provide a clear and complete picture of the credit standing of your customers can help you to determine how much credit, and on what terms, you should extend.
By monitoring your business credit file, you will be aware of any change in your ratings before it affects your relationships with customers, suppliers and financial institutions.
If you need help managing your business’s credit, contact the Economic Development Collaborative-Ventura County. Conveniently located in Camarillo, California, we’re here to help.
Content credit: sba.gov