Four reasons to check your business credit profile

Before entering into a business relationship, it's important for smaller firms to assess the risk of a new customer or supplier by checking their credit report, but what most businesses often neglect is obtaining a copy of their own credit report.

Getting a clear and balanced picture of how their credit profile looks to potential lenders is of the utmost importance, as a credit report is automatically created for a business if their financier, customer or supplier makes a credit enquiry with a credit reporting agency.

Here are four reasons to check and update your credit profile.

Your business can be determined financially sound by a customer

If you're involved in the day-to-day operations of your business, you'll have a strong understanding of your cash flow and financial position - if you don't, read five warning signs of financial trouble. Having a good understanding of your finances is undoubtedly good for business, but if that's not stated on your credit file, chances are the firms you deal with won't know how financially safe or risky you are.

It's important to contact a reputable credit reporting agency and provide them with updated details such as your business details, employee count, import status and financial figures. By doing so you are ensuring people viewing your credit report - such as government departments, service providers and suppliers - have an accurate picture of your cash flow, and hence your business.

Credit checks can determine your creditworthiness

Similarly, credit checking your own business can help you determine if you are creditworthy - that is, if you are eligible to obtain credit. Banks and other financial institutions use credit reports as a basis for determining whether to extend credit or a loan to you. Even if you are dealing with a smaller lender, they are likely to have a bigger financial backer who will likely need to see tangible evidence of credit checking.

Credit checks can help you secure better credit terms from banks

If you're a good payer and are generally in good financial health, improving the information on your credit profile can help you secure better credit terms from banks. For instance, you may find it's easier to increase your credit card limit or lock in lower interest rates on a loan, if you have a good, informed credit history.

Credit checks can help you lower premiums for insurance

If you are purchasing goods from another company but aren't confident they'll deliver on time or at all, you may be considering obtaining trade credit insurance. Alternatively you can also credit check your supplier, but if you're going down the insurance route, it's very likely your insurer will in turn conduct a credit check on your business. In this case, a poor credit report implies that you may file more claims, giving insurers a bigger incentive to charge a higher premium. Keeping tabs on your credit history can help you obtain better insurance terms and lower your premiums.

Get a comprehensive view on your own business credit history - check your business credit profile here >>

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