Net 30 Blog

Five Steps to Boost Your Case for Business Credit in 2010

December 22nd, 2009 by Alex Coté

Of all the ‘Great Recession’ stories in 2009, perhaps none painted a bigger picture of the Main Street vs. Wall Street divide than the small business credit crunch. You know the storyline well. Battered with high risk debt, banks and other lenders became increasingly reluctant to provide the vital credit lines to the nation’s primary jobs’ engine (the millions of small businesses so critical in powering growth). As we turn the page on the calendar – and perhaps the corner on the economy – 2010 promises to bring new angles to the story from Main Street to Wall Street to Capitol Hill. Will such developments finally loosen up the credit businesses so desperately need to spark revenue growth and jobs creation? We certainly hope so, but the details of how and when remain utterly clouded. Here’s one thing we can say for certain – our lock prediction for 2010: When credit conditions do improve, you can expect banks and business partners to be far more proactive in assessing risk.

With that in mind, here are five simple steps every company should be proactively taking in 2010 to put themselves in the best possible credit position:

1. Establish a credit file at the major credit bureaus. Many years ago there was only one major bureau – Dun & Bradstreet. Today the business credit reporting landscape has changed, so make sure you establish a credit file at ALL of the major bureaus (Dun & Bradstreet, Experian, Equifax and Cortera)
2. Get your suppliers involved – they’ll love you for it. If you are financially healthy and meeting your own profitability goals, your suppliers and vendors will obviously benefit as you grow and thrive. Encourage them to report to the major credit bureaus (see above) so that you get credit (no pun intended) for regularly paying your bills on time.
3. Pay your vendors and suppliers on time – it might even save you money. Sounds simple, but if you are not paying your bills in a timely manner it will negatively impact your business credit report and will eventually hurt your ability to obtain business credit in the future. Many vendors also provide discounts if you pay early, so if you get in a cash flow habit of paying before the invoice is due, you’ll often save 2% or more off your invoice.
4. Communicate, communicate, communicate. Whether you are extremely profitable with plenty of cash on hand or struggling to pay your next invoice, keeping your suppliers in the loop goes a long way in negotiating your terms – and keeping a positive credit history intact. Never go completely dark and stop returning inquiries. And never stretch out payments without being up front and transparent with your suppliers as to why you may need to pursue such a tactic. This will alienate your suppliers, lead them to cut you off completely, or worse, encourage them report such delinquencies to the major credit bureaus. Lack of transparency will handcuff your business and potentially cause you even more pain.
5. Monitor your own credit report. Just like you monitor your personal credit report, you should do the same for your business. Small discrepancies or disputes can mean the difference in receiving business credit or being denied.

• Posted in: Business Credit, Cash Flow, Credit Reports, Small Business, Tips
• Permalink: http://blog.cortera.com/2009/12/22/five-steps-to-boost-your-case-for-business-credit-in-2010/
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