7 REASONS YOUR SMALL BUSINESS NEEDS A CREDIT CARD
With more than 600,000 new small businesses started each year, it's safe to say that the dream of being a successful business owner is a strong one. If you are considering starting your own business, or are already the proud owner of a business- here are 7 reasons why your small business needs a credit card:
> Commercial Credit
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TAKING OUT CREDIT INSURANCE ON BUSINESS RECEIVABLES
Taking out a credit insurance policy on customer receivables is an important risk management tool for businesses that reduces exposure to bad debt and helps to stabilize cash flow. Generally, credit insurance is targeted to big businesses with an extensive, often multi-national customer base. But under difficult economic conditions, even smaller businesses should consider using this insurance product as part of their risk management strategies.
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TOP TIPS FOR GETTING CREDIT
These are days of great uncertainty for companies wanting to hang on to their ability to borrow money. Clark D. Griffith, a vice president and senior relationship manager with UnionBank in Los Angeles, says that one of the bank's clients, a public company that had a credit facility backed by a syndicate of many lenders through June 2011, recently made "a strategic decision" to continue that arrangement for just a single year. And it cost the company a pretty penny.October 15, 2009
> Commercial Credit
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HOW BUSINESS CREDIT RATINGS ARE DETERMINED
Not unlike a personal credit rating, a business's credit rating is a review of the company’s transaction history. Such a rating is used to measure the level of financial risk of the business to a lender and the probability of the business defaulting on the loan. The information used to create a rating is gathered from companies with which the business has had financial relationships, such as suppliers or other lenders.
> Commercial Credit | > Business & Financial Advice
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THE BEST WAYS TO PREVENT OVERDUE ACCOUNTS
Establishing relationships with customers who have bad credit histories may be the cost of doing business. You can take steps to protect your interests, however. The following suggestions may help accounts get paid on your terms instead of your customer’s.
> Commercial Credit
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POINTS FOR UNDERSTANDING YOUR CUSTOMER'S BANK CREDIT LINE
A bank credit line (also called a revolving credit facility) is a working capital loan. Your customer may have, for example, a $10 million line of credit with their bank. This means they have the ability to borrow up to $10 million and, up to that amount, may increase or decrease their borrowing on a daily basis. The amount borrowed under the bank credit line is included when calculating most leverage ratios.
> Commercial Credit
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THE GOOD & BAD NEWS ABOUT THE BIG 0RDER
Scenario
A new customer has given you a purchase order for $1.5 million and wants you to ship about $200,000 per month on net 30 day terms. Although this company is not creditworthy for the full $1.5 million, you definitely could use the business, as this level of business is substantial for your company. Since your profit margin is thin your manufacturing department suggests to build one-third of the product at a time to make the production cost effective. As a credit manager faced with this
> Commercial Credit
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GOOD BUSINESS CREDIT CAN SAVE YOU MONEY
Maintaining a good credit rating for your business is always important - but even more so in times when credit becomes tighter and more difficult to obtain on affordable terms. For small business owners seeking financing of almost any kind, a clean credit report goes a long way toward hearing "yes."
> Commercial Credit
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REPORTING A DELINQUENT ACCOUNT TO A CREDIT BUREAU
At some point, every business owner gets so frustrated by an outrageously late account that they decide to report it to a credit bureau. But frustration shouldn't be the only impetus. If you don't report delinquent customers, their poor payment histories won't show up on their credit reports, and other businesses will risk extending credit to a deadbeat company.
> Commercial Credit | > Consumer Credit
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JUST HOW IMPORTANT IS A CREDIT POLICY?
A Credit Policy supported by upper management needs to be one of the first items put into place to help insure a successful business. There's rarely an issue that doesn't find it's way across the desk of the Credit Manager. Time, cash flow, feelings, relationships, just to name a few, are severely tested while these issues are being solved. IIf a credit policy is in place, accepted and understood by all employees and their customers, many problems will be avoided.
> Commercial Credit
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HOW TO HANDLE BOUNCED CHECKS
From time to time a customer will bounce a check and it is important that the credit department responds appropriately to this serious incident. Returned checks are broken promises and are sometimes an indication that the customer is in serious financial trouble. On the other hand, bounced checks often result from poor record keeping rather than a deliberate attempt to defraud the creditor. If and when a customer bounces a check, the credit department should have a written procedure for handling
> Commercial Credit
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GET THE FULL NAME IN THE HOME LANGUAGE
While providing collection services in Japan for twelve years on behalf of US or European creditors against Japanese companies or individuals, I was often dismayed by how carelessly the names and contact information of the debtors were obtained during the most basic part of the credit process, namely the credit application. Although I would receive names and locations that often reflected how an English reader needs to read them, from a domestic point of view, the names and locations were vague
> Commercial Credit
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THE COST OF THE CREDIT INVESTIGATION
A credit manager should always try to evaluate the time and costs necessary to conduct a credit investigation since the credit manager’s time is viewed as an opportunity cost. As a cost to the company, the specific costs associated with the credit investigation can easily add up. These include: credit reports, phone calls, postage, and even customer visits will each contribute to the credit investigation costs.
> Commercial Credit
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LETTERS OF CREDIT – HOW VALUABLE ARE THEY?
The selling arrangements in foreign trade vary according to the buyers' creditworthiness and the countries in which they are located. When the credit standing of the buyer is unknown or uncertain, letters of credit can be one commonlyh used method of payment.
> Commercial Credit
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HOW DO YOU CHOOSE YOUR CREDIT MANAGER
From time to time I am asked to advise companies on the skills necessary to hire a credit manager. This is not an easy request since every company is unique by virtue of its products, services, size, number of employees, and above all the management who are in charge of running the company. Choosing a credit manager has to not only encompass the ideas of whether that employee will “fit” the corporate culture but has to also deal with the understanding of what a credit manager could and should do
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