Getting Credit For Your Business
Being able to get credit for your business when you need it, is critical for your ability to grow your business. You need to work now to improve your credit rating even if at the moment your business does not need extra finance.
When a company asks a bank for a loan the bank looks at the company’s credit rating as part of their decision making process. Keeping a healthy credit rating is something that a good accountant can help you to achieve.
The majority of a businesses credit rating is based on their transaction history. The key transactions that banks look at are payments to other companies for services or products. A company that pays their bills to the agreed time-scales will have a good credit rating. Even more essential is paying loans, leases and mortgages on time and in full.
The structure and levels of a company’s debt is also taken into account by the banks. A good accountant will help you to structure your debt to not only get the best value for money, but also in a way that will not damage your ability to borrow money in the future.
Cash flow is another factor in whether or not banks are willing to lend to you. Your accountant will be able to prepare reports from previous years accounts that demonstrate that your company’s cash flow is sound. Good cash flow indicates that your business will not suddenly run out of cash and go to the wall.
Other things, which are less obvious, also contribute to your company’s credit rating. These include your company’s reputation, background principles and the way you treat your employees. If a company has a habit of ending up in court then they are a risk in comparison to one that does not. The size of the business its market share and share price also contribute to the company’s ability to borrow money.
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