A Business Credit GuideIf creating credit for your new business is what you want, it is preferable to setup such business as a corporation, and create credit in the name of the corporation. A corporation is a distinctive legitimate body that stands on its own with respect to credit feasibility. A corporation can be designed and created as a “C” corporation where by it is responsible for its own tax bracket and it is considered as a distinctive entity when it comes to all business, liability concerns and credit issues.
Business Credit Guide by business trade lines
How to guide
A credit reporting organization like Dunn and Bradstreet might show up on your door step with preference to a hand full of some of their services. Although they are vast in this area and offer a lot of good advice, and Dunn & Bradstreet rating carries a lot of weight and are a force to reckon with in the business world.
It’s also a great idea to purchase a CD from a bank, and as well take out a chain of credit with such bank. Which will also be attached to your documentation of capital loan, and the viability of a swift and quick payback. You are basically creating a footmark report which shows the credit reporting agencies that ABC Company is an apt credit risk. Equifax, Experian, and TransUnion are three separate credit reporting agencies that records pretty much similar information, except that the more you stride, the more it becomes valuable information.
It would be an ideal environment in which it is possible for a business to start up without the requisite of any type of working capital at all. At the same time, the obligation of the business to expand inventory so as to capture market share, payroll needs, and every other daily prerequisites are all able to be accomplished in a much more clear-cut manner and with business credit situation appropriately managed with finesse.
The most suitable way to handle this situation would be to conceive a close relationship with any local bank, whereby the bank would be able to work together with you as you forge your credit profile. Be careful not to fall victim of the proliferation of the online “quick-to-loan” entities simply on the basis that they have very high interest rates, many at times in the range of 25 to 30 percent. The easier the money, the more likelihood that it might end up being a bad experience. It is preferable to work with somebody at a local level
Business Credit Identity
Protect Your Business Credit Identity
From the perspective of a business owner, my discoveries about business credit identity theft was alarming and shocking. Below are some facts you need to know as a business owner:
1. A Business Credit Report is Available to the Public
Credit report hidden from the public view are owned by individuals. At the same time, it is entirely a different case with business credit reports. It is available for everyone to see, along with confidential information. Because of this, business owners are likely to experience fraud and mischievous schemes from criminals.
2. Identity Thieves Can Change Information on Reports
When a business credit report gets into the wrong hands that is, identity thieves, they amend the information on the reports. Most of the times these reports are self-reported. As a result of this, it is of great risk for a thief to amend data on the business registration information of a company. For example, it is possible for them to amend the number of employees or a company’s annual revenues.
How can a business owner protect his or her business from identity theft?
1. Understand Your Business Bank Account
The moment your business falls victim of identity theft, the next thing to do is to get a clear and detailed understanding of your bank’s policies and liabilities about fraudulent transactions. There are fewer protections for business accounts than individual accounts, and it might turn out that some actions are not covered.
2. Wire and Electronic Payments
The easiest targets for identity thieves are usually wire and electronic payments. An apt criminal can easily work or maneuver their way into your accounts. Although it is very possible for you to report this form of theft, but the chances of recouping all that you have lost is very slim due to the speed of these frauds.
Set up a specific limit on the amount of money that can be wired to or from the account, furthermore, you can also activate a two-tier or multiple authorizations on all wire and electronic payments.
3. Use Online Banking whenever possible
Online banking is a swift and speedy way to gain access to your banking account. The odds of catching an identity thief is increasing high if you monitor your business banking account regularly, receiving email and text notifications for all activities performed on the account. This eliminates paper statements, and reduces all forms of fraud associated with such statements.
4. Use A Dedicated Computer
Have a dedicated computer for accessing your online banking transactions. It is not advisable to access your account on a series of computers, especially if they are publicly used by many, they have little or no security and are prone to theft.
5. Avoid Public Wi-Fi when logging in to you account
Accessing your business banking account from a public Wi-Fi is not only risky but also dangerous. There are free internet in a lot of public places with little or no security and protection which makes them prone to theft.
6.Utilize Strong Passwords
Password is used to restrict unauthorized access into your business banking account. It must be unique and strong and must not be less than eight characters long. It is usually advisable that your password should include lower and upper case letters, number and special characters so as to strengthen its uniqueness.
Every business is prone to criminal and mischievous schemes. As a business owner, following the tips discussed above protects you against identity theft.
Scoring for your Business Credit
A Business Credit Score Differ From a Consumer score.
Managing a business these days is becoming more and more difficult. It is paramount that you reflect and muse on every aspect of the business such as location, marketing, sales and purchase, the thought of it alone is very scary. There is one other thing that needs to be put into consideration but is often neglected by a lot of people is their business credit score. The business credit score is a vital piece of business dealings, which is extensively used for a vast number of different things.
To begin with, a business credit score is used in a closely related manner to a consumer credit score, strictly for business. Credit scores are used to determine the likelihood that someone will default on a loan. So consumer credit scores are used to ascertain if the consumer will default, while the business credit scores are used to ascertain if the business itself will default. It is thus reasonable and sensible to have an entirely distinctive credit score for your business and your own personal credit score.
Business credit scores are also employed to ascertain the credibility of doing business with the business by other businesses. Low credit score indicates that a business is certainly not very good at keeping to their agreements. This in turn is a clear indication that they are not the right people to be doing business with. Though a business credit score and a consumer credit score are used alike, the two are distinctively different things
The contrast between consumer credit scores and business credit scores is most visible in how they are figured. FICO is the major business that judges the score in the case of consumer credit scores. The concept of credit scores is used for various purposes by few other businesses, but on the long run, talking about a consumer credit score in turn means talking about a FICO credit score.
In the case of business credit scores, it does not have an eminent business. There is not a single notable place that gets used most often for business credit scores. That is, depending on how you are checking, a business may possess several different credit scores. If you are contemplating on doing business with a company, it is paramount and necessary to check on a suites of different credit scores. The motive behind this is so that you have a detailed idea of the way and manner the company works and to determine the likelihood of them defaulting on their agreements.
Lastly, even though business credit scores and consumer credit score are two different things, consumer credit scores can be employed in determining a business credit score. This usually happens in the case of small businesses, where by the sole operator is essentially the business owner. If this is the case, knowledge about that individual’s consumer credit score will aid in knowing or having an adequate idea of what their business will likely be like.
In conclusion, a consumer credit score and a business credit score are more like each other than they are different from each other. All that matters is whether it is your personal score, or your businesses’ score.
Reviewing A Company’s Financial Position
Understanding A Company’s Financial Position
It is of great importance that you understand a lot about the financial position of a company if you are contemplating on investing in this company or taking a job with them. Some companies are always ready and willing to share information about their financial position while others will refuse blatantly to do so. This is how you go about finding out more about the financial position of a company.
Quarterly reports are released by majority of these companies to document their cash flow, profits and expenses. The aim of these reports is to keep investors informed. These quarterly report is always available on the official website of the company you desire to learn more about but you can also contact an employee of the company to ask where you can find these reports. These reports are usually a good and clear indication of the financial health of the company but these have limitations. It gets better when you wait for the latest quarterly report to become available before deciding.
The most crucial document to review when evaluating a company before lending money, investing or accepting a job offer is the balance sheet of the company. The balance will show all the assets of the company as well as subsisting liabilities. A negative balance sheet is rarely a bad thing, most especially if it is a recent company, if a solid plan to acquire assets and generate profits with the money that was borrowed is available. However, if it is observed that a company has had negative balance sheets on a long-term frame and she is not making decisions to reduce liabilities and acquire more assets, this is a clear indication that the company is not in good health.
Another thing to look out for is the income statement of the company. The objective of the income statement is to document the different streams of revenue and to catalog all the expenses of the company. If expenses are higher than revenues or a narrow profit margin is observed, the company might not be in a good healthy condition. Income statement with enormous sales number is not necessarily an indication that the company is flourishing but you also need to consider her spending as well. A healthy company is obligated to have sales that increases at a constant rate on a long period of time as well as a good profit margin.
If you are contemplating on investing your money into any company, then cash flow statement of the company is the document you should be looking into. Cash flow statement is not to show how much profit the company generates but to know how much is distributed. Some companies are flourishing but they have small cash flow since majority of the profits are invested. Cash flow statement of any company is supposed to give you an idea of the kind of returns you can expect from your investments.With these four documents, you get an adequate assessment of the current financial position of any company. Any company should be ready and willing to make this information readily available to potential investors. It is best not to invest if these four documents are not handed to you.