Thursday, 22nd August 2019 | Small business financing Canada,Business loans for bad credit
How to improve your business’s credit score
Your business credit score helps to establish your company’s health and trustworthiness. In many respects, it operates in the same way as a personal credit score—opening (or closing) pathways to products, financing, and preferred rates. Learn how working with iCapital can help accelerate this process.
Whether you’re just starting your business or in a position where you must repair a low credit score, building up your credit should be at the top of your list. Your business credit score helps to establish your company’s health and trustworthiness. In many respects, it operates in the same way as a personal credit score—opening (or closing) pathways to products, financing, and preferred rates. Learn how working with iCapital can help accelerate this process.
All about your credit score
Your credit score is a simple three-digit number arrived at from information gathered by the credit bureaus in Canada that is intended to give lenders, governments, and others a snapshot of how you use credit. The idea is simple: the higher the number, the better your score. In other words, a higher score means you’re less of a risk as a borrower.
How your credit score is calculated
Obviously, events like contact with a collections agency or bankruptcy will negatively affect your credit score, but there are other factors taken into consideration as well including the amount of debt you carry, how many times you’ve applied for credit, and how long you’ve had credit. This last variable can negatively affect new businesses. Establishing a good credit score is as important as repairing a bad one.
How to improve your credit score
One often-overlooked way to boost your business’s credit score is to use it—responsibly. This might seem counter-intuitive but consider this: if you don’t carry any credit at all, how can a credit bureau assess your risk as a borrower?
Applying for and using various credit products can be an extremely effective way to establish or repair credit. In any and all cases, you must adhere to the tenets of responsible use:
- Make your payments on time. Always.
Late payments reflect terribly on your ability to manage your finances. If necessary, set up automatic withdrawals or calendar alerts for your due dates. - If you can’t meet the entire debt, make the minimum payment.
Simply disappearing until you’ve got an entire payment is bad practice. Always pay at least the minimum. - Use your credit, but don’t max it out.
Having credit and not using it is not going to help your score. Use your credit on purchases you can afford, and then pay them off. Carrying a high debt load (or maxing out your line of credit) is a warning sign to lenders. - Consider your applications for credit carefully.
The amount of “hits” on your credit report can affect your score. Every time you apply for credit, a note goes on your account. If your report shows that you’ve been applying for numerous products it can be a warning sign to lenders. Select the products that work best for you and limit your applications.
Choosing your business credit accounts wisely
Chances are you’ve already got a business bank account and credit card—and if not, get on this. Beyond these basic tools, you might also want to consider applying for a gas card or an office supply store account. The best way to establish your company as a trustworthy borrower is to get credit and make your payments on time, and that’s where an iCapital product can really work in your favour.
When you take out an iCapital term loan or merchant cash advance, you select a repayment schedule. Usually, a small amount is automatically withdrawn on a daily or weekly basis until the financing is paid in full. The regularity and frequency of your repayments are a convincing demonstration of your solvency and responsibility.
A good business credit score is an important part of running a successful business. If your score is low—whether because you’re a new company or you have made financial missteps in the past—you’ll need a strategy to improve it. The careful selection and use of appropriate products are the best way to establish a healthy score.
Read Also
Simple Strategies to Manage Your Seasonal Inventory
When managing seasonal inventory in the retail sector, careful planning is critical. Many retailers find themselves in a balancing act between avoiding leftover inventory and also empty shelves. To escape heavy markdowns at the end of a season and potential cash-flow problems, follow these strategies for profitable results.
Planning for Success
- Start Early: Begin planning well in advance of each season, reviewing last year's sales data to identify trends and patterns.
- Create a Detailed Plan: Organize your information into a comprehensive plan, breaking down each season's data by category or time frame. This will help you visualize your inventory needs and make informed decisions.
- Leverage Data Analytics: Utilize data analytics tools to gain deeper insights into customer behaviour, demand forecasting, and inventory performance. This can help you optimize your stock levels and avoid overstocking or understocking.
Timing is Everything
- Anticipate Demand: Forecast demand based on historical sales data, market trends, and upcoming events or promotions. This will help you determine the optimal time to order and replenish inventory.
- Avoid Stockouts: Ensure you have sufficient inventory to meet customer demand, especially during peak seasons. Stockouts can lead to lost sales and customer dissatisfaction.
- Stagger Shipments: Consider staggering shipments throughout the season to avoid excess inventory and reduce the risk of markdowns.
Repeat Success
- Identify Best Sellers: Analyze your sales data to identify your top-selling items for each season. Prioritize these items for replenishment and ensure they are always in stock.
- Optimize Reordering: Implement a system for reordering popular items based on sales velocity and demand forecasting. This will help you maintain optimal stock levels and avoid stockouts.
- Monitor Inventory Levels: Monitor your inventory levels to ensure you have enough stock to meet demand without overstocking. Use inventory management software or tools to track stock levels and identify potential issues.
Making the Most of Seasonal Cash Injection
If you've secured a seasonal business loan to support your inventory needs, here are some practical ways to use the funds:
- Inventory Investment: Allocate funds to purchase additional inventory, particularly for high-demand products or new offerings.
- Marketing and Promotions: Invest in marketing campaigns to drive sales and increase brand awareness during your peak season.
- Staffing and Training: If needed, hire additional staff or provide training to ensure efficient operations and meet increased customer demand.
- Equipment Upgrades: Consider upgrading equipment or technology to improve efficiency, productivity, and customer experience.
- Debt Reduction: If applicable, use a portion of the loan to reduce existing debt and improve your financial health.
Marketing and Customer Engagement
- Leverage Seasonal Marketing: Create targeted marketing campaigns to promote seasonal products and drive sales. Utilize email marketing, social media, and in-store promotions to reach your customers.
- Engage with Customers: Seek customer feedback to understand their preferences and adjust your inventory strategy accordingly. Offer personalized recommendations and provide excellent customer service to encourage repeat purchases.
By following these strategies and staying informed about market trends, you can effectively manage your seasonal inventory, minimize waste, and maximize profitability. Remember, consistent planning, data-driven decision-making, and a focus on customer satisfaction are essential for success in the retail industry. Contact iCapital at 1.877.251.7171 to apply for a business loan and get the funds you need in 48 hours.