Business credit is designed to fund costs directly associated with the operation, management or expansion of the business, with the goal of increasing both company revenues and profits.

Distinguishing Business Credit from Personal Credit Uses

Although business and personal credit are intended to be used for different purposes, many small business owners co-mingle debt, thus blurring the line between their business and personal financing.

When financiers begin their credit evaluation process they realize that you, the business owners have the authority to decide how business funds are used. Comingling of personal and business assets can make it difficult to assess business’ ability to repay debt. Without an established strong business credit profile, the creditworthiness of your business will most likely always be judged by your personal credit profile.

Good Business Credit Can Take You Far

Business credit profiles offer many payoffs. Commercial credit information is compiled and stored by credit repository agencies. Dun & Bradstreet (D&B) is the largest aggregator of business credit information in the U.S.

D & B uses a numerical rating system called the PAYDEX Score to report rate a company has paid its bills over the past year. Information is reported to D&B by various vendors. The D&B PAYDEX Score ranges from 1 to 100, with a higher indicating better payment history. Business credit ratings are used to assess anticipated repayment or risk of loss.

Here's a sample ratings chart to demonstrate the anticipated repayment period on the 1 to 100 rating scale. In this example, you can see that the score of 38 means the company is 60+days slow in paying their bills.

THE 8 PILLARS OF PERFORMANCE

The Healthy Credit Practices℠ Program uses 8 key factors to measure business creditworthiness. These factors are key building blocks for maintain a strong business credit profile. Healthy Credit’s 8 Pillars of Performance provide a simple method to measure financial and management stability factors that demonstrate creditworthiness.

Pillars of Performance

Revenue Stability
Cost Controls
Positive Credit Behaviors
Management Capability
Reliable Financial Systems
Strong Fiscal Management
Consistent Profitability
Business Asset Base

As you implement a credit management plan to manage and monitor your company's performance, use the Pillars if Performance to improve your creditworthiness and take control of your own capital access.

Click here for more information on the Pillars of Performance.

No business plan is complete unless it includes credit planning. Developing healthy credit for your business takes work. Like a healthy body, it is developed over time and takes work to maintain. Here are a few steps to get you started.

STEP 1 - Gather Company Data & Take Your Credit Temperature

STEP 2 - Learn Where You Stand

STEP 3 - Measure & Chart Your 8 Pillars of Performance

STEP 4 - Plan & Control Your Business Growth

STEP 5 - Create a Detailed Credit Use Chart

STEP 6 - Prepare Your Credit Plan

STEP 7 - Review & Chart Your Business Credit Progress

If you would like assistance to develop a Healthy Credit Plan for your
company, consider participating in a Healthy Credit Seminar. We'll take you step-by-step through the process and help you build credit for your company.