How Can I Manage My Business Credit Profile?

|
How Can I Manage My Business Credit Profile?
How Can I Manage My Business Credit Profile?

Running a business is no small feat: it requires passion and perseverance, as well as a good head for the market. As an owner or manager, you'll be juggling responsibilities for the business' daily operations, as well as planning for the future.

Part of expanding often involves laying down capital to invest in the growth of the business. However, in order to take the next step, many businesses will rely on credit to keep things afloat.

If you've been thinking about taking out a line of credit for your business, there's a lot you need to consider, especially if you are a sole proprietor or small business owner - as credit decisions you make can be reflected in your personal credit file.

Using credit to your advantage

This is not necessarily a bad thing in itself - credit can be a useful tool in handling expenses and supporting cash flow, but it is important that businesses exercise caution to properly manage their credit.

According to Inc. Magazine, it's important to put effort into building credit with your vendors and suppliers to support business healthy credit.

"First, make sure that you understand your financials and that they align your records with federal account history and balances," advises Inc. "Secondly, define how much credit you actually need by analysing your business plan and projecting your monthly cash flow."

"This should determine how much credit you'll need to apply for, as applying for too much can actually affect you negatively."1

Keeping track of businesses credit

One way you can track your business' credit history is by requesting a copy of your business credit file. In it, you can see events which are visible to credit providers, which can be used in deciding the success of any future credit applications.

Entrepreneur contributor and CEO, Michael Stanfield recommends vigilance when it comes to keeping on top of credit.

"Use a credit-monitoring service to monitor your credit, or regularly monitor your credit yourself, to ensure that no one's using your credit fraudulently. Open your credit statements as soon as they arrive in the mail and review them, or monitor your accounts online."2

You can keep track of any changes made to your business credit report with Business Credit Alerts, which will notify you by email when certain amendments are made.

1Inc. Magazine, How to Responsibly Use Credit Cards for Your Business. Accessed June, 2015.

2Entrepreneur, Managing Your Personal and Business Credit. Accessed June, 2015.

We also suggest

4 Tips For Managing Late Payers

Chasing a late payment can feel like the most awkward of jobs for the small business owner. These tips show you how to capitalise on a wealth of information now available on your debtors to help avoid those awkward conversations and get paid faster.

Managing Credit History for Small Businesses

Managing Credit History for Small Businesses

Small business owners have a lot on their minds, especially when they are in the crucial first stages of establishment, and again when they start to think about expanding. The attraction of starting up or taking over a small business is the ability to bring a novel idea to the market and be responsible for the direction of your own career.

Financial outlook brighter for businesses as insolvencies fall

A rebound in Australia’s overall economic performance has been reflected in the fall in insolvencies experienced in the December 2016 quarter.

Related products

Credit and Identity Products

Get your free Equifax Credit Report* or check out our subscription plans including tools to help manage your credit profile and protect your identity.

* Eligibility criteria apply

Learn More