Why an Excellent Credit Rating is Good for your Small Business
You might be one of those fortunate small business owners that won’t need financing, but as you know, in business and everything else, nothing’s set in stone. But even if your small business is in tiptop shape, maintaining an excellent credit rating should be one of your top priorities; here’s why:
Suppliers will trust you more. Just like you, suppliers are choosy when it comes to who they do business with. They want to get paid on time, but if your credit rating is great, you might be able to negotiate discounted or longer terms because they trust that you’ll come through for them.
Score brownie points with landlords. Having a great credit rating would communicate to landlords that you’re trustworthy and you might even be able to negotiate more favorable terms when you renew your lease or when you look for a new place.
Build trust with lessors. With a strong credit score, bargaining with lessors would be easier.
You’ll get better credit card rates. You probably know by now that credit card rates differ significantly from bank to bank and borrower to borrower. That said, having a solid rating could aid you in obtaining a better annual percentage rate or APR.
Dealing with lenders would be so much easier. Borrowers with strong credit ratings have better bargaining power when it comes to loan amounts, interest rates, and loan terms.
It would positively impact your cash flow. Healthy cash flow translates to more options. Lower accounts payable and higher accounts receivable could be excellent cash flow health indicators, which you could then leverage if you need to improve or grow your small business and get additional funding.
A solid business credit rating is simply essential to most small businesses. If you currently don’t have a high rating, don’t fret; you could take baby steps such as regularly checking your credit reports to see if everything is as should be and paying bills on schedule. A finance expert in Golden Valley also recommends that you open a separate business bank account to keep your personal bank account separate from your business. This would decrease financial impacts between your personal and business credit ratings.
So start small, take it day by day, and after six months or so of good, credit-related behavior, you’ll begin to see your credit rating improving.