All it takes (or doesn't take) for an avalanche to drop on your business credit is a delay in your accounts receivable. Your accounts payable department will invariably be delayed when consumers make late payments. Now that your business's credit reports have already been damaged, how do you fix the situation? How can your business credit be repaired and rebuilt?
There are tactics you may employ internally to fix problems with corporate credit and support the development of solid credit profiles.
1. Reduce your debt: Keeping revolving debt to a minimal is important for both your credit and your financial stability. While you shouldn't completely shun credit cards, it is preferable to maintain your debt-to-income ratio as low as you can while your company credit is being restored. 2. Make prompt payments: While restoring credit, make paying at least on time a habit. Paying in advance is even better; company credit bureaus truly appreciate it and it will be shown in your scores. In this step, you can also try to make up any past-due payments to delinquent vendor accounts in an effort to repair the relationship. 3. Keep personal and business accounts separate: Personal and company accounts must be kept apart in order to develop business credit. It's time to stop mixing up your personal and professional costs if you have a history of doing so. 4. Add new vendor accounts: While it might be challenging to discover suppliers who submit information to business credit bureaus, creating new accounts and maintaining them well are excellent ways to build credit.
5. Check references before extending terms of payment: Let's go back to how you got into this situation in the first place. Your customers' late payments had a domino effect on your capacity to make timely vendor payments. While you do not want to turn away customers, you should pause before introducing payment terms up front. Many businesses demand that new clients pay in full upon receipt before extending terms.
Repairing business credit is not an easy procedure. Many businesses seek assistance from professionals in the business credit sector. You can reach out to us to assist you with your business credit at penncorpllc.com
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