What is Business Credit and Why is It Important?

May 8, 2012 By Leave a Comment

What is business credit? This question always comes to mind when a person thinks of establishing and managing a business of his or her own. Now that many businesses already acknowledge the importance of having a credit line to manage a company, it has helped them compete better by having somewhere to turn every time they experience a financial crisis.

What is Business Credit?

Business credit refers to a company’s ability to acquire goods and services or secure a loan during a financial pinch. It allows businesses to borrow money and other resources against the assets of the business rather than the owner’s personal properties. This is why the owner or representative of a company is not required to personally guarantee the loans issued for a business credit card.

Unlike products or services that can be acquired with the use of personal credit, those that were obtained with business credit can only be used for commercial reasons. Companies may use business credit to buy anything from manufacturing equipment to employee uniform and office furniture. Sometimes, businesses also use their line of credit to seek cash loans and use the money for operational or start-up costs.

 

A business credit card is essential to acquiring goods, services and other resources that will make or break the success of your business. Image courtesy of Flickr.

A business credit card is essential to acquiring goods, services and other resources that will make or break the success of your business. Image courtesy of Flickr.

 

 

Importance of Having Business Credit

A business credit card eliminates the fear of overspending by giving the owner access to available credit. Credit statements are also issued regularly, so businesses with some form of credit can easily keep track of important business expenses. Additionally, most credit cards have travel rewards that will save your business a lot of money every time you ask one of your employees to travel for business purposes.

Credit history is also important to any business, so having a credit card will eventually pay off. If you were able to maintain high credit scores for your business, your company will easily qualify for other forms of credit during times of financial need. So the next time you ask yourself the question:”What is business credit,” you should reread this article and understand why it is essential for business success.

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Four Tips to Managing General Business Credit More Efficiently

April 25, 2012 By Leave a Comment

Whether you’ve just decided to start your own business or looking to manage your business credit with greater efficiency, staying on top of your finances should be your utmost priority. As your business experiences steady growth, the need to build a good credit record for your business intensifies. Once you’ve built business credit, you can easily qualify for lower rates on leases and loans, and protect your personal credit cord in times of excessive business debt.

 

How can you efficiently manage your commercial credit? Here are four simple tips that will get you started in the right direction.

 

Efficient business credit management is essential to qualifying for loans, financing options and lower prices of business supplies. Image courtesy of Flickr. Efficient business credit management is essential to qualifying for loans, financing options and lower prices of business supplies. Image courtesy of Flickr.

 

Check Your Business Credit File

 

Owners of small and big business should know whether they already have a credit file with D&B before building their credit. If you don’t have a credit file yet, you should apply for a D-U-N-S number to set up one. This unique business identification number is essential to creating a general business credit file. But if it turns out that you already have a file with D&B, it is best to review it completely and verify all the information it contains.

 

Organize Key Documentation

 

Be prepared to give your lenders a record of your business taxes and earning statements. They will use this to see how much you’ve earned for the past few years. Some lenders are also interested in knowing the potential of your business, so you should expect them to ask for a copy of your business plan. If your business has irregular earnings, you should also come up with explanations that will strengthen your case.

 

Pay Your Bills on Time

 

To manage credit more efficiently, you have to be familiar with various factors that can affect your credit ratings. Paying your bills on time is crucial to improving your business credit scores and building a good payment history. Use your credit line sensibly and be careful not to exceed your limit. Once you’ve managed to get into the habit of paying your bills on time, you should check out D&B’s list of 150 factors that can affect commercial credit scores.

 

Establish a Consistent Identity

 

According to the Better Business Bureau, it is important to establish a consistent identity before opening your first accounts. It will be easier to manage your general business credit if you always used the same business name, address and contact information. Agencies that issue credit reports can easily keep your records on file if the identity of your business remains consistent.

 

These four tips are all you need to improve your general business credit in a consistent manner. Once you’ve kept high commercial credit scores, you can easily secure better financing options and get all the business supplies you need at an affordable price.

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