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How do you rate?
HAS you business got a good credit rating? Do you know what your rating is? And if so, how can you improve it?
These factors are considered critical if you are looking to get deals from banks or suppliers, including overseas, and yet they are often neglected by businesses, with one of the main reasons being a company's failure to share details about their activities.
Credit agencies are known to consider three key elements.
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How much equity is in the business and whether shareholders reinvest profits, to assess the long-term solvency.
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Short-term liquidity, which covers what is going in and out of the business in terms of costs and income, ie cashflow.
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Profitability.
However, some small and medium firms no longer need to supply full audited accounts each year and therefore, lenders and other business contacts may be more reluctant to provide credit without access to these details. So the answer in these cases is to think about whether you should file accounts despite it not being a legal requirement. That way, allowing others to see the strength and solidity of your company can be a huge benefit where your rating is concerned.
It is also worth noting that suppressing profits to pay less tax and taking money out of the business to finance lifestyle can also lead to a credit rating being affected. Crunched even.
This is key to getting money off banks. Credit ratings can make or break the business and it's so important to make sure you havethe right rating to get the funding you need. cash flow is the thing to keep going and without it the business is lost. Best get to see an accountant if you have any concerns.
Credit ratings are important but not as important in being the right person to run your business. Make sure you lead well and the rest will fall into place. Like the advice though.
Yes, but running your business is one thing, obtaining credit froma bank is another.
You can be a fantastic business owner but if your business does not have the correct rating then you may be susceptible to a lack of cashflow just like any other, and need cash. If that happens, you need a good credit rating, whether you are Donald Trump or not.