4 pros for choosing customers with a good credit score
Are you checking your customers’ credit ratings? Here’s why you should be
When it comes to credit ratings, many people tend to associate them with applying for credit cards, mortgages, and loans. However, they have many more uses, especially when it comes to running your own business.
For any business, it is important to stay on top of finances and ensure that accounts are kept in order. To keep everything running smoothly, it is always advisable to try and build a client base with a healthy credit rating – this minimises the risk of you finding yourself in any difficult financial situations further down the road.
You can find more information about your customers’ credit ratings through credit checking services like Experian.
There are a number of reasons why it is important that your customers have a healthy credit rating, outlined below:
If your customers have a healthy credit rating, it’s much more likely that you can rely on them to pay you on time and in full. This, in turn, ensures that you are able to make your own payments on time. After all, it’s no good making lots of money if it is all tied up in invoices.
In order to maintain a healthy cashflow, it is essential that your customers pay on time. Remember, if you owe money and are unable to pay because your customers haven’t paid you, this may impact your business relationships and also your own credit rating.
As discussed above, if your customers don’t pay on time, it can impact your ability to pay your suppliers and other expenses. As we all know, in business your reputation counts for everything, so earning a reputation as a company that doesn’t pay its debts can be hugely detrimental to how your company is perceived, and could potentially jeopardise future contracts.
Having a customer base with a healthy credit history will help you avoid any situations that may be harmful to your business’ reputation.
Cashflow can also impact upon your productivity and growth as a reputable business. If your clients aren’t paying, and you can’t afford to buy materials and supplies, you may not be able to complete other orders on time. Once again, ensuring that your customers have a good credit history can help ensure that your business remains productive and successful.
There are many reasons why a start-up company may not survive and succeed. One of the main reasons, however, is running out of cash. And, more often than not, the reason businesses run out of cash is that clients don’t pay on time. Building a client base with a healthy credit rating will increase your chances of survival.
Ultimately, you are responsible for ensuring the success and growth of your business, so it’s vital that you stay on top of your finances, and enforce strict rules and regulations when it comes to collecting in your payments.
This starts by checking your clients’ credit history.