Starting off a business in today’s competitive environment can be as challenging as it is exciting. On one end, it offers unlimited opportunities for you to grow as an entity and establish your presence in the marketplace. It also poses potential threats that can lead you to obscurity. One of the greatest challenges for every new business venture or startup is efficiently and vigilantly managing the minimal resources they have in their humble beginnings.
Under such circumstances, having someone well versed in the marketplace that can guide you through your early days to avoid any potential setbacks can be of great help. Agencies like Utility Bidder have been in the market for a long time, known for providing services that can help you cut down your extensive electricity, oil, and gas costs by enhancing your business’s credit score.
What is a business credit score?
Before learning the secret recipe of maintaining a good credit score for your business, let’s first learn your business’s credit score. Simply put, your business’s credit score allows you to gauge your ability to manage your finances, your ability to make purchases, and pay debts. This means that the greater your credit score is, the more well-managed your finances will be, which will lead your businesses and startups to stability, sustainability, and growth.
Nobody wants to end up in bankruptcy within a short span of starting off, so to avoid this, it’s necessary to look for services, advisory, or consultancies that can guide you through and help you maintain a good business credit score. In addition to the perks mentioned above, a good credit score qualifies your business for lower-interest loans. Lower interest loans come in handy, especially when you want to negotiate for longer terms with your vendors.
Also Read: 10 Most Essential Banking Services
How to draw more investments with high credit scores?
One of the greatest benefits of having a good credit score is high investments. Put your feet in an investor’s shoes for a moment and let me know if you would want to invest in a business or a company that is struggling with managing it’s finances? The obvious answer is a no. While investments are imperative for your business to survive, let alone grow, nobody wants to invest in a business with a poor credit score. This is enough for you to understand how important it is for you to increase that score to a decent forty, at least if you really want to get in the eyes of potential investors.
What are the factors that determine your credit score?
High tariffs are a big no for small businesses, and to avoid that, you need to escalate your credit score. To do so, it’s very important for you to understand the factors that directly affect your credit score and determine your worth as a business entity. Predominantly, two of the main factors considered when determining your business’s credit score are your purchase history and loan payments. But having said that, there’s a lot more to it than just these factors which eventually determine where you stand as a business.
Purchase History:
This is one of the most important factors that determine the credit score for your business. Late payments are a huge death blow for your business’s credit score. To avoid that, you need to promptly pay for your purchases and bills.
In addition to purchase history, the second most important factor which determines your credit score is loan payments.
Loan Payments:
We all take loans as a business at one point or the other. Investors are very interested in knowing how well you have been doing in repaying the loans you have taken over the years. A poor loan repayment history leads to a red flag for your business and can drift away potential investments from your business. Some other factors that influence your business credit score are the size of your business and the length of your time trading.
Size of your business:
The size of a business refers to the magnitude of its activities, which defines the level of output and, as a result, the volume of sales. A business can be carried out on a big, medium, or small scale. Being a newbie, the inadequate purchase history is very obvious, impacting your credit score and making your potential investors look at you as a risk rather than an opportunity.
The length of your time trading:
Another important factor that determines your credit score is the size of your business, on the whole, its structure, and it’s time trading. A small-sized business may lead to a low credit score.
Also Read: 6 Easy Ways To Keep Your Credit Score Eligible For Business Loans
Why is your credit score a concern for your energy suppliers?
You may wonder, why is your business’s credit score such a huge concern for the energy suppliers? The answer is very obvious. Your credit score helps energy suppliers determine how well you will be able to make the payments. Energy suppliers would never want to provide services to businesses with a proven record or poor payments; therefore, they are keen to learn about your credit score when providing energy services.
Therefore, if you want to avail the best deals out there, it’s important to maintain an impressive purchase history. Having said that, there are business energy suppliers out there in the UK that aren’t that interested in your credit score. However, the conventional contracts of energy suppliers reveal your credit scores to them anyway, so it’s important for you to make your credit score look impressive.
Ending Remarks:
Since you now understand how important your credit score is for your business, you should avoid the red flags listed above that can drop your score and lead to high tariffs. Some of the immediate actions you take to improve your credit score are making sure there are no further delays in your payments. Another important thing you can work on is minimizing your debts. In addition to that, registering with a good credit agency will inculcate good financial habits in you, ultimately improving your credit score.