Credit and Finance, Growth
Why not knowing your business credit score could cost more than you think
Successful business owners know that the key to profitability is to reduce unnecessary costs wherever possible. As well as investing in your company with the right people and equipment to get the job done, you must also identify any wasteful spending, especially if you’re planning to scale up. Keeping a tight rein on staff expenses, or finding a better deal on telecoms, broadband, utilities and office supplies all help improve operational efficiency – but are there hidden costs you could be missing?
When your application for a business credit card or loan is accepted, you may assume that you’ve got the best rate on the market, especially when using a price comparison site. However, according to a recent Experian survey1, over a third of companies don’t know their business credit score, which means they might be paying over the odds for financial products.
Something as simple as tracking your business credit score, using a service like Experian’s My Business Profile, is a good way to reduce the cost of finance. With less to hand over to the banks, you’re left with more money to plough into growing the business.
But those who never check their business credit score run the risk of missing changes on their credit file. Creditors use this score to judge your application – and if there’s any reason to suspect you can’t pay back what you owe, they could simply refuse it outright. For smaller firms, where cash flow is a constant concern, the ability to pay suppliers on time can easily be hampered, pushing them to high-interest short-term loans as they try to plug the shortfall.
It’s worth noting that the cost of a poor credit score can also come in the form of lost contracts. Many of your customers may use Experian’s Business Express Credit Report tool when choosing a supplier, and your financial history will tell them whether or not you are likely to deliver.
Whether you’re just starting out in business or looking to build your credibility further, accessing your business credit score is the first step to making your company as strong as it can be. Since most companies depend on external finance to achieve their goals, taking the time to improve your credit score is a shrewd investment.
To help you make safer decisions about who you do business with, find out more about Experian’s Business Credit Reports. Alternatively, be smarter about how others see your business by using Experian’s My Business Profile.
1 Experian survey was conducted between December 2017 and January 2018. In total, 115 small and medium sized businesses took part in the survey.