A recent report on www.creditcards.com offers small-business owners some suggestions for staying out of trouble with creditors and making the best possible impression upon lenders:
Monitor your records: Make sure financial statements are accurate and up-to-date so credit issuers can get a clear and positive picture of your financial situation. Check your credit reports regularly to make sure there are no mistakes that could harm your chances of securing credit in the future.
Avoid overextending yourself: Postpone applying for more credit unless you absolutely need it. Credit requests can lower your score, which can, in turn, lead to higher rates and less reasonable terms. Also, only take on debt that directly increases revenue. Bad debt, such as buying a new computer when your current computer is working well, adds to a business's monthly financial commitments but does little to up the revenue stream.
Manage cash flow: During a recession, it's not unusual for business owners to receive late payments from clients or find themselves temporarily low on cash. To keep operations running, consider using a charge card that's payable in full each month to help control expenses.
Create a payment automation system: Make note of payment due dates and use phone and online payment services to avoid amassing late fees and damaging your credit.