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What business managers need to know about business credit

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Almost every business manager finds themselves facing the task of dealing with business credit. Savvy business managers know that it is crucial to be aware of how much business credit they extend, how much they use, and how they manage it all. While business credit has become an integral part of the business world if business mangers misuse or mismanage business credit it can end up seriously damaging the business and even bringing about its failure.

There are many different guidelines that business managers need to be aware of when it comes to business credit. For example-Business owners should never mix their personal and business credit. This is simply a disaster that is waiting to happen. If you fail to follow this guideline it can have serious ramifications for your business and even its survival. There are other factors that every business manager should be aware of as well when it comes to business credit. Here is what business managers need to know about business credit-
• Always know your business credit rating-The first thing that any business manager needs to know concerning their business finances is the credit rating for the business. You will need to always have a clear idea of what your business credit rating is and how you can be improving it. Far too often business managers have gone to apply for business financing only to find out their business credit rating is low or has some bad marks that have disqualified the business from obtaining the financing that it needs. Keep in mind though that in today’s tighter lending market many lenders will want to see your personal credit rating, as well. They assume that a business manager is a better risk if he or she is managing their own credit well, also.
• Understand the connection between business financing and business credit-Many business owners fail to consider the connection between business financing and business credit. However, these are not two separate entities. Most business owners will begin using business credit long before they need to apply for business financing. This means that if you have not used your business credit effectively, there is little chance that your lender will take a chance on you and give you a business loan or extended line of credit. This makes managing your business credit extremely important right from the start.
• Be aware of the best ways to use business credit cards-Just like personal credit cards there are ways that you should and should not use them. You should never charge up more then 35% of your credit card limit. You should try to pay off the balance monthly since interest rates can be exorbitant. You should also never borrow from one credit card to pay off another. You should only use business credit cards for expenses that are directly linked to the business. Following these guidelines of using business credit will help you to establish the business credit rating that you really want.
• Know that all business credit isn’t the same-There are many different types of business credit cards and business owners would do well to take the time to shop around and find the best deal for their business. You want to make sure that you are not paying any more for business credit then you have to.
• Consider the impact of business credit on your business-It is important that any business manager understand that business credit can make your business look more legitimate. You will be able to set up a legal structure and business credit rating from the first time that you use business credit. This can make your business look more credible and help you to avoid tax issues that can arise should your business be audited.


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