Credit and Finance, Growth
Are you clued up when it comes to business credit scores?
If you’ve answered no to this, don’t worry, you’re not alone. According to a recent Experian survey1, as many as 19% of businesses said they had limited or no understanding of business credit scores and how they work. In addition, 37% of those surveyed also admitted that they didn’t know or weren’t sure of their own business’ credit score.
Given that over 73% of respondents highlighted increasing sales and profitability, and cutting costs, as their main business priority for the next 12 months, the time is ripe to get in the know about how your business credit score, along with your customers’ and suppliers’, could help steer your company to success.Starting with the basics, knowing your business credit score is an important step in ensuring your business finances are in order. Experian’s My Business Profile lets you see what creditors see before deciding whether to offer you credit. The higher your business credit score, the more chance your business has of being accepted for credit.
Cash flow will always be one of the main concerns of any business, and with so many factors to juggle, it can be hard to see whether your business finances are healthy. However, something as simple as knowing your business credit score, and also that of suppliers and customers, is a great way to ensure you’re not caught out.
Only 19% of those surveyed admitted that they check all their suppliers’ credit scores before working with them, with 40% admitting they don’t check them at all, and a further 36% saying they only check some.
Almost half of those surveyed said they don’t regularly check their suppliers’ credit score because they had not yet had a problem them. However, all it takes is one run in with a financially unstable supplier to put all your hard work at risk and it could, in turn, even lead to problems further down the line completing contracts for your customers.
Keeping an eye on your suppliers’ credit scores ensures that you’re not going to be left to pick up the pieces if one was to go into administration. Tools such as Experian’s Company Credit Check, are a quick and easy way to purchase a one-off credit report for a supplier before you start working with them so you can minimise risk and check their track record and financial stability.
As important as it is to check a supplier’s credit status, keeping tabs on any new client’s credit score is also a good way to confirm whether they’ll be able to pay you when they say they will.
Naturally, any business will be reliant on money coming in, but if you’ve been let down by a customer not paying you, this could have damaging effects on your ability to pay your creditors which may affect your own business credit score and ability to secure future credit. However, despite this, according to Experian’s recent report, 28% of businesses surveyed are still not completing credit checks on new clients, something which can again be done easily using Experian’s Company Credit Check.
When it comes to business credit scores, it can seem like a minefield, but a few simple checks really could make all the difference between whether your business sinks or swims.
1 Experian survey was conducted between December 2017 and January 2018. In total, 115 small and medium sized businesses took part in the survey.