What’s Your Score?
More than half of Australia’s SME owners are unaware that their businesses are being credit scored.
“It’s a concern that there is such a low level of awareness about business credit scores”, the Australian CEO of On Deck Capital, Cameron Poolman said.
Credit scores have a direct impact on a company’s ability to borrow funds.
The business lender commissioned research showing that only 47% of owners know that credit reference companies gather data on their businesses.
On Deck recommends 5 steps to ensure your credit score remains high.
Pay bills on time
Late payments and defaults can be recorded on an SME’s credit history leading to a lower credit score.
Carefully manage applications for new credit
An SME’s credit history will display applications for new credit including those that are not successful. Multiple applications can leave lenders asking questions about why an SME may have been rejected for finance by other lenders.
Maintain a manageable level of debt
Borrowed funds can help an SME seize business opportunities as they arise but the key is to maintain a level of debt that is manageable within an SME’s current and forecast cash flow.
Recognize the merits of different types of credit
Using long term debt to meet short term business needs can lead to cash flow problems and unnecessary interest charges. Review the balance sheet, look at how different credit options are being used, and aim to match cash flow needs with appropriate finance strategies.
Monitor the SME’s credit score
Take advantage of free credit score calculator provided by OnDeck Australia. OnDeck’s alert service allows real-time monitoring of any changes in the business’s credit score, allowing the business owner to keep tabs on the venture’s credit worthiness