How to Bounce Back from Bad Business Credit
The great thing about business credit is that you can rely on it when you need it, putting your company into a a position to be able to react quickly when presented with market changes or opportunities for expansion. The downside, though, is that if your company misses credit payments, your credit score is harmed, making it a little harder to secure future funding. All isn’t lost, though. If your company’s credit is in need of repair, there are a few strategic steps you can take.
Don’t Be Late
Making sure you make payments on time sounds like common sense advice, but in many instances, late or missed payments are the reason a small company has a less than stellar credit rating. While you may think you have a good reason for sending in a payment a few days late, you’re much better off sending it in on time and keeping your credit rating in good standing.
An important first step is communicating with your creditors. You want to pay them, and they want your money. Chances are, they will work with you to get your company’s debt repaid if you’re transparent about your situation.
There are several options that your creditors may choose to allow you to pay your debt and repair your credit. One option is a settlement offer, where your account is closed for one lump sum payment that is less than the total balance that you owe. Another is a payment plan that allows you to pay what you can each month until the debt is repaid. There are other options, of course. The point is to communicate with your creditors in order to reach an agreement that is suitable to you both.
Build Your Credit
Most companies rely on suppliers for materials, ingredients, wholesale goods, or equipment. Some suppliers expect payment prior to delivery, but others extend trade credit to their customers. This is a standard practice that allows your company to pay after delivery of goods. If your company has this relationship with a supplier, ask the supplier to report your payments to a credit bureau. As long as you are honoring the terms of your trade agreement, this will help your business credit rating.