With company credit reports playing an increasingly important part in business, particularly with traditional lending routes in short supply, more credit decisions are being made on the basis of information contained in a credit report. In fact, businesses are depending on healthy supplier/customer relationships for both cashflow and solvency, so it makes sense for a business to actively build a healthy record.
So how do you go about building such a healthy credit record and secure the trade credit and finance you need?
- Complete your report and accounts on time and ensure it is delivered to Companies House
Our research shows that companies who submit their report and accounts within the last possible month to Companies House are eight times more likely to go into liquidation than those who file earlier.
- Pay your bills on time
Companies that are slow to pay are often demonstrating early warning signs that they are in danger of going out of business.
- Pay suppliers within agreed timescales
This doesn’t mean that you have to pay everyone in advance, or even within 14 days, but agree timescales with individual suppliers and stick to them.
- If part of a group, check the group’s credit records carefully
If your orgnanisation belongs to a wider group or parent company, the credit records of other entities could have an indirect impact on your own record, as negative information could be taken into consideration when a supplier is deciding on credit terms and looking at your company report.
- Check out your existing and potential customers
To protect your own credit record, ensure you don’t deal with customers who order goods but end up not paying for them due to not having the funds or have gone out of business.
- Take account of security threats
It can take a long time to shake off a poor credit record, even if it is caused by fraudsters rather than your own business transactions. So make sure that you have suitable security in place that will protect your company from illegal activity.
- Co-operate with your auditors
It’s a good idea to work with auditors making sure you provide full and transparent disclosure of financial information. Your business will be scored more highly if you can show positive comments from independent auditors when filing at Companies House.
- Check your own record regularly
Use company credit reports to monitor your business’ information, so that you can ensure that any incorrect data is updated as this will improve your rating.
To view your company credit report (for free) click here.