July, 2019

What is a corporate credit rating?

Corporate credit rating is acquired to ensure a business can afford it’s financial commitments and therefore company credit scores are critical for obtaining finance or gaining contracts for the business.

At Navigate Business Recovery, we work with credit agencies and help the companies to understand their credit ratings and ways in which it can be improved.

Are Corporate Credit ratings important?

Corporate credit ratings are important as these are obtained by people to assess whether they should give the business new work or contracts. This is predominantly the case with public sector contracts. Also, suppliers often use the credit rating facility to establish if they can provide more credit or if the rating is low they may reduce the finance available to the business.

How to improve a Company’s credit rating

Depending on the type of business and which credit agency is used, the lower the credit score the more problematic it may be in securing work or new contracts for the business. We can help company directors to understand their current credit score rating by working with credit agencies and improving our client’s credit score.

10 Steps to improving your Corporate Credit Rating

It is imperative to ensure that your Corporate Credit Score is the best it can be and there is no time like the present to check your own business’s rating. Here are ten simple steps to improve your score:-

1. Find out your business credit score by obtaining a report from a reputable credit agency ie Experian (in the UK)
2. Ensure to make effort to pay all invoices on time. Late payments do not reflect well.
3. Make sure all company accounts are filed on time and Annual Returns are filed with Companies House. Late filing can be a sign of financial concern.
4. If you own a start-up business (new business), keep a track of your own personal finances. This is very important at the beginning of a new start-up business as your company’s financial data may be limited and therefore your personal information may be used as an indicator of the company’s commercial purity.
5. Make sure your business is registered with a credit reference agency, thus ensuring there is enough information about your business available or people to see.
6. If at anytime you change your business from a sole trader to limited, make sure you or your accountant makes contact with Companies House to advise them of the changes.
7. Regularly check the credit position of your suppliers ensuring they are viable and not likely to leave you in the lurch if they were to go bust (into liquidation or bankruptcy).
8. If you are considering taking on a partner within your business, make sure they have plenty of experience and a good credit score. This will also help to boost your own credit rating!
9. Good cashflow is important at all times and beneficial for any business. If you collect payments on a monthly basis it would be worth arranging to collect these by direct debit, reducing paperwork and ensuring funds are paid into your bank account quicker.
10. Frequently check your credit score and don’t become lazy!

If you want to find out anything further about this subject then please feel free to call me on 01494 786000 or 07961 116321. All conversations will be in strict confidence. You can also email me vee@navigatebr.com

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DISCLAIMER This blog / article is for information and interest only. It is not a substitute for full professional advice, which will take account of the specific and individual circumstances surrounding your matter. Navigate Business Recovery Limited cannot accept any responsibility for any loss arising as a result of any person or organisation acting or refraining from acting on any information.