An Egg-cellent offer this Easter week!

The long weekend might be over, but we’re extending our Easter special offer – Access CreditHQ FREE for one month!

Now we’ve hit the second quarter of the year, it’s a great chance to reflect on the first few months of the year and review the businesses with whom you’re trading.

Are your suppliers paying you on time? Might it be time to increase or reduce the amount of credit you’re extending to a particular business? Has your business’ credit and payment score improved and you’d like to show potential customers this?

CreditHQ can help improve your cash-flow and credit management, and ensure you’re working with the companies that are best for your business. If you know you want to work with a particular business but know in advance that they’re not likely to pay you until 45 days, you can plan accordingly and make sure you’ve got enough cash in the meantime for other purposes.

So this Easter, we’re offering you access to CreditHQ’s Standard subscription free of charge for one month! Simply enter the code EASTERHQ16 in the voucher code box*.

You’ll need to enter your card details, but don’t worry –  we won’t charge you a penny for 30 days (and if you find you’re not using CreditHQ, simply cancel anytime within the first month to avoid the £25 monthly subscription fee).

So hop to www.credithq.co.uk and start checking out the best businesses you should be working with!

*voucher code valid until 30 April.

good credit score

3 ways to get a better credit score for your small business

Your company’s credit score is important – it will affect how much credit your can get, and it can make the difference between another business choosing you or someone else with whom to do business. So improving your score can only be a good thing!

There are a number of credit reference agencies (e.g. Experian, Equifax, Dun and Bradstreet), who use various sources of information to produce your score in different ways. Credit scoring is about trying to predict the future, from your past financial behaviour.

Although calculated differently, the score will give an indication of whether your credit risk is good, bad or ugly.

Here are three ways to improve your score for your small business…

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Number One – check your score

The first thing to do is check your company’s report – you need to know what your score is, so that you can start to improve it. You also need to know your score, because other people will be checking it to figure out if they want to do business with you – so you should know what information they are seeing about your company.

We can help you with this – you can find your company’s details on our site – CreditHQ – and see your company profile page, which shows your company’s financial information, credit indicator, payment indicator and credit events – so check it – it’s free to sign up!

Credit agencies do make mistakes, so check all your details (address, financial information, credit events, dates etc.).
These details either come from Companies House or the credit reference agency, so dispute anything that you think is incorrect or unfair.

Number Two – pay on time

Time is money – make sure you do things on time! This will massively help your score.

Pay your bills on time – set up reminders, set up automatic emails, set up direct debits or standing orders, so they get paid automatically. Paying even the minimum amount by direct debit for loan repayments or credit card bills will mean that you never miss a payment. You can then top it up each month for the extra amount.

If you are having difficulties, then contact the lender or the payee – changing your payment schedule is preferable to defaulting, and has less impact on your credit score than a county court judgment or decree against you.
Negotiate longer payment terms up front to give yourself extra time to pay.

File your accounts on time – or better still, before the deadline, as it can take extra time for processing. If your accounts tell a good story, then file a full set of accounts, rather than abbreviated accounts.

Number Three – manage your cash flow

Get paid on time – chase the money that is owed to you – set up automatic emails to remind suppliers that invoices are nearly due, and then chase them if they don’t get paid. If you still don’t get paid after the due date, then sending a ‘letter before action’ can make a huge difference – we can help you with letter templates, and debt collect agencies.

Check when a company is likely to pay you – you can sign up for free on our site to find out how long a company is likely to pay you beyond the average payment terms. If the average payment terms are 30 days, many big companies pay up to 100 days late – if you know this already, you can plan for it in your cash flow.

Minimise your debt – if other companies see a lot of debt on your balance sheet then they are less likely to extend credit, as you pose a greater risk to them. Credit agencies will take into account the difference between your current assets and liabilities, and what’s coming in and going out of your business. So maximize your working capital and minimize your debts.

A couple of extra tips…

It’s important to build up as much positive history as possible (which is tough when you’re a new business), but simple things can make a difference, such as if you have a positive credit history with a business credit card, don’t close the account even if you don’t use it anymore.

Every time you apply for a credit product (be it a credit card, contract mobile phone, car insurance), it adds a footprint to your file. If you have too many applications, particularly in a short space of time, it can trigger rejections as it makes it look like you’re in need of credit. Space out applications if you can, and only apply for the things you really need.

Good luck with improving your score, and remember we can help – so please do take a look at our site… and keep reading our blog!

Why is my cash-flow never accurate?

money2When you started your business I’m sure your advisor, whether that be your bank advisor, financial advisor, or just your experienced friend who you turned to, advised you that you’d need to work on a cash flow forecast pretty soon so you’ve got a clear idea of when your going to have to pay different bills but also when you’re going to get money coming in so that you can pay these bills.

It’s a must-do activity for every business, from small to big, and invaluable in helping you keep your business afloat. I’m sure you’ve heard the statistics of the number of new businesses that fail within the first couple of years and that the major cause of this is the lack of flowing cash rather than a bad business idea or a failure to get enough customers.

So why is it that so many businesses fail even though they’re all advised to set up a cash flow forecast?

The answer is that the cash flow forecast isn’t accurate enough to actually manage your business by. This could be for a number of reasons.

Firstly it might not be kept up to date as regularly as it should be and so it becomes more of a reporting document rather than a management document. It should be updated whenever there are changes to the elements contained within it. If you get a new bit of business then the income should be reflected in it, or if you identify a new expenditure that will occur in a month’s time then this should go in once you know about it.

Without it being up to date you won’t be in a position to make informed decision elsewhere in the business. How can you decide whether to buy a new computer to replace the slow one you’re working on now? How can you decide whether you should invest time to chase that new customer who is located a little further away than you’re used to?

The second reason it won’t be accurate is that chances even if it is kept up to date that you’re being overly optimistic about when things will happen, whether that be when you’ll sign the new deal or when your customers will pay you.

It is this last factor that many people overlook, because they assume that their customers will all pay them within the payment terms that they’ve agreed to, when in reality, many companies don’t do this at all. This can make a real difference.

If you’re expecting to be paid in 30 days but you don’t get the money for 50 days, that pushes out your cash-flow quite considerably and means that you won’t have the money when you expected it and thus you can’t pay your bills when you expect to. So the best thing to do is adjust your cash-flow to when you’ll actually get paid, not when you should get paid.

To do this you either learn from previous experience which customers will pay you when (for example, you know that ACME Ltd always pay you at the end of the month after invoicing, regardless of when they get the invoice then you should adjust to reflect this), or alternatively you get some insight into the payment behaviour of your clients from their credit reports. These reports contain values such as a company’s Payment Beyond Terms, which is a value given to indicate on average how long after an invoices due date the company pays. This is calculated based upon a company’s payment history across lots of other organisations with whom they do business so can be quite valuable for you to know.

So take steps to face reality, and do it regularly, if you want your cash flow forecast to be a useful tool to support you make decisions in your business.