If you want to apply for a loan for a company or are looking for an alternative financing option, you should always keep an eye on your creditworthiness.
Five tips on how to improve your company’s creditworthiness now
1. Cashflow, Cashflow, Cashflow
If you want to improve your credit rating, you should keep an eye on your cash flow. The primary goal should always be that the money from outstanding receivables flows back into your company as quickly as possible. A well-thought-out receivables management is therefore the basis for a good credit rating. When making contractual agreements, you should make sure that you set the shortest possible deadlines for paying bills in order to improve your creditworthiness.
Companies that do business in different countries also need information about country-specific payment behavior and current data on the markets, including social and economic facts. Seek out the assistance of services that give you insight into the specific payment behavior and risk factors that affect the predictability of export and investment returns.
2. Increase the equity ratio
The higher your company’s equity ratio, the better your credit rating. If you want to increase your equity ratio in order to improve your creditworthiness, you should use alternative financing instruments. This includes, for example, the leasing of vehicles, machines, or systems. With leasing, the one-time high purchase price is reduced to several small installments.
A company’s equity includes the registered capital, the profits that remain in the company, and shareholder loans with an assumption of liability.
3. Pay bills on time
Credit bureaus store information for up to four years if an invoice was not paid or not paid on time. As a result, you are judged negatively by banks or other business partners, and your creditworthiness decreases. That’s why it’s important to closely monitor that your accounting department pays all invoices on time. Then it works with the credit.
4. Communicate balance sheet data early
If you want to improve your credit rating, you should communicate regularly with credit agencies and banks. In this context, it is crucial that you communicate your balance sheet data to credit agencies as early as possible and always keep your data up to date. It is also important that you provide as detailed a balance sheet as possible. The more details and data, the better!
5. Carefully check the creditworthiness of suppliers and business partners
If one of your business partners does not deliver the goods on time, this can paralyze your entire production process and negatively affect your creditworthiness. Therefore: Regularly check the creditworthiness of your suppliers. A business credit score provides information about the probability that a company will have to file for bankruptcy within the next twelve months. In this way, you can keep an eye out for other business partners at an early stage and arrange for a replacement.
Having a clean credit history allows you to get loans and even net 30 accounts from suppliers, goods, and services needed by your business to strive. For example, NAMYNOT, a business that provides various online marketing solutions, provides a net 30 accounts to customers with good credit standing.