Have you credit checked your own company?
Here at the Credit Protection Association we often notice that one of the first things many new members do when they become members and gain access to all the CPA services in the Members Area is to take our a credit report on themselves.
Of course they then go on to check their key clients and business partners. They pass us the details of debts they want us to chase. But often they start with their own credit report. They are curious as to how their own company is rated. Which is understandable. Actually when you stop and think about it, the surprising thing is many do not!
SMEs ignore their credit scores
Research reveals this is far from a unique phenomenon for CPA members. Many companies never or rarely ever check their own score. Research from RateSetter Business Finance has found 44% of SMEs have never checked their company’s credit score. The study also reveals that a further 6% have opted against checking their score in the last year. Only one in five (18 per cent) had checked within the last six months.
Why should you check your own score?
Credit scores are used by lenders and suppliers to determine whether businesses have a good track record of repaying debt, and are therefore one of the key factors affecting an SME’s ability to get a loan or goods and services on credit.
Credit information is compiled in reports based on information collected from a variety of sources. That includes details of all the loans and other forms of credit that a business has had in the past and, crucially, whether a business has kept within the agreement and paid the money back. Any other potential issues, such as County Court Judgments, are also flagged. A wide range of sources both public and private, provide data on payment histories, past performance and company filings.
James Salmon, Operations Director at The Credit Protection Association “Taking a status report on your own business is extremely easy and can help identify any issues that might prevent you receiving credit in the future. The information you see on our report will have come from the same sources as the information seen on the reports taken by your bank and suppliers.”
He added “Identify any errors. If Companies House or some other agency such as the County Court System are pumping out information about you that is incorrect then you need to know and you need to take action to have it corrected. Even a simple mistake such as an incorrect address can affect your credit history. We are of course happy to help and advise our members who identify issues”
“Ultimately while you can get incorrect information removed, the best way to get a good credit rating is to maintain a good trading record. Pay your bills on time. If you unfortunate to have County Court Judgements (CCJ’s) awarded against your company, then pay the CCJs within 28 days, they should not then appear on your credit record if they have been paid.
“Ensure your company accounts are accurate. File them in a timely manner at Companies House. Late filing is often seen as a sign of financial difficulty. Many smaller companies opt to file simplified or abridged accounts. Micro-entities can file simpler accounts. While there is nothing wrong with this, the less information you make public, the less information the producers of credit reports have to work on and it could restrict the availability of credit.”
Conclusion
Credit check your own company. And do it periodically. Those you ask for credit are checking you and you should want to know what they are seeing.
The Credit Protection Association is a credit management company established in 1914. If you supply goods or services on credit then we can help you!
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