How to Build Business Credit

Access to business financing and credit facilities is essential to startups and established businesses. Establishing a solid business credit helps companies execute immediate and future business plans efficiently.

It's wise to plan and start building business credit early enough to have more time to establish good credit. Borrowing is an excellent option for startups looking to build a strong business foundation and small businesses looking to grow and expand.

Before we talk about building business credit, let's first understand what it is and why it is essential.

What is Business Credit?

It is essential to note that your business has a credit score and report, just like you do. Business credit bureaus like Dun & Bradstreet, Equifax, and Experian record business credit information such as debt payments. Creditors, lenders, and insurers use this information to evaluate your credit or insurance application and business deals. Establishing business credit is also helpful in the following ways: 

• It helps you separate your business credit history from your personal credit history.

• It gives you access to credit facilities.

• It demonstrates separation of business from the owners.

6 Steps to Building Your Business Credit

1.   Choose the Right Business Structure

Choose a business structure that establishes your business as an independent legal entity such as LLC, LLP, or Corporation—registering your business as a legal entity helps separate business financial liabilities from personal liabilities.

2.   Apply for Employer Identification Number (EIN)

The IRS uses your business EIN (Federal Tax ID Number) to track financial transactions for tax purposes. Business credit bureaus also use EIN to record your credit history and keep a credit score. You need this record to qualify and apply for credit facilities.

Your business EIN is also required to open a business bank account and file federal tax returns.

3.    Open a Business Bank Account

Your business should operate a checking account in its legal business name for all business transactions. If you use a business credit card for any transactions, pay the credit card bill from the same account.

4.   Register Your Business Address and Phone Number

This simple step solidifies your business's existence as an independent entity. In addition, you can now register with business directories, which require businesses to have an address and a phone number to sign up. 

Business credit reporting agencies collect information from business directories. It helps to keep up-to-date and consistent business contact information with all popular directories. Some of the most popular directories include Better Business Bureau, Angie's List, and YP.com.

Additionally, a dedicated phone line helps you establish your first trade credit relationship with your phone company. The phone company reports your credit history and helps establish your business credit.

5.   Establish Credit Lines with Entities who Report

Apply for net terms with suppliers and vendors to build business credit. Then, as you buy inventory on credit, your purchases and payments are recorded with business credit reporting agencies. Business reporting agencies use this information to create your credit profile and generate your business credit rating.

It is essential to deal with vendors and suppliers who report to a business credit reporting agency.

6.   Mind your Business Credit

Building business credit follows the same principles as building personal credit. Practice responsible borrowing habits, such as paying debts on time and in full, to improve your business credit score. Note that late payments will negatively affect your business credit score.

Finally, monitor your business credit history for inaccuracies and inconsistent business information. Correct any discrepancies by filing a dispute with the reporting agency involved.

Crown Financial, LLC helps businesses better manage cash flows to boost creditworthiness. The good news is that we do not need a pile of paperwork and tax return records to qualify for our services. Contact us to learn more about how we can help you improve your business credit score.

Is Your Business Credit Healthy? Here's How To Know

So you've finally decided to go for it — You're ready to be an entrepreneur and get your business off the ground. You've done your research, you've found your niche' and you're ready, Woo-hoo! But wait — are you really ready? How does your business credit profile look? Did you know that building and maintaining a solid business credit profile can facilitate and secure certain perks for your business, including: 

• Better Premiums

• More Desirable Loan Terms

• Successful Vendor Negotiations

However, in order to build business credit you will need attention to detail and patience. Yes, patience, as it can take a little while to build up your business credit profile. Your business credit profile will display your business's effectiveness in its purchasing power, debt, and how it handles the business's finances in general.

What's Business Credit — Isn't It the Same As My Personal Credit?

Well, not exactly, although it is true that just like your personal credit, building business credit happens over time. Business credit takes into account many other factors which form your business credit score.

Equally, personal and business credit alike can impact the rates you pay for services and goods. For instance, if your business's credit scores are good, you could be afforded the benefit of paying lower insurance premiums, or, you could receive lower interest rates on lines of credit as well as small business loans. This could come in handy for you when you need to negotiate extended vendor terms, which could offer you more room to manage your business's cash flow.

Crown Financial, LLC has put together some tips on how to build your company's creditworthiness, including, what business credit is, and how businesses can use it to their advantage.

What You Should Know About Business Credit

First things first, prior to establishing any credit for your company, you'll need to legally register it as a business entity. You'll also need to have adopted your business structure in order to build credit with the business credit reporting agencies.

Business Credit and How It Works

When a business works with creditors, vendors, or suppliers, a business credit report is normally generated that shows a company's activity and accounts to the business credit bureaus. This is how your business's credit scores are produced.

Who Is Business Credit For?

Any eligible business can benefit from credit. Business credit is generally sought when you need to pay vendors or suppliers on payment terms, or you need to borrow money for your business. So having good business credit is essential for your business, and it could make a difference in your business succeeding or crashing.

Why Do I Need Business Credit?

The creditworthiness of your business affects many decisions, including:

• Your business's insurance premiums

• Your effectiveness to raise investor money

• Your qualifications for obtaining contracts with other agencies

• Your credit line and net terms that you acquire from suppliers and vendors.

• Rates on loans and your eligibility for Small Business Administration loans.

Seven Tips for Building Business Credit

Building your business's credit can be more challenging than building your personal credit. And, just as your personal credit score takes time to build, your business credit score will also take time. Whether you're starting a new business or if you've been in business for a while, and you're just learning of business credit, follow these seven steps to make sure you're on the right track.

1. Verify Your Personal and Business Credit

Not sure if your business has even obtained any credit? Don't fret: There are ways that you can check your business credit reports.

Dissimilar to personal credit reports, bureaus are not legally required to give you free access to your business credit reports. However, you can pay to get a full copy of it from all three of the major business credit bureaus, which include: 

• Equifax

• Experian

• Dun & Bradstreet

Some free services may be able to provide you with also give you summaries or access to your scores and business credit reports.

2. Is There One Single Business Credit Score?

Simply put, no. Experian, Equifax, and Dun & Bradstreet are competing agencies that each develop, and sell their own business credit scores. Also, when evaluating your business, many vendors and lenders may also prefer specific business credit reports.

3. Build Your Business Credit

If you only use your personal credit card to cover your business expenses, don't be surprised if your business has yet to acquire business credit. Some businesses depend entirely on data regarding your business. However, some business-scoring models may produce a business credit score dictated by your personal and business credit.

In order to attain business credit, you will first need to complete the following steps:

• To ensure your business and personal identities are separate, you will need to form a limited liability company (LLC) or incorporate your business.

• Obtain a federal employer identification number (EIN). An EIN works as your business's Social Security number.

• Use your business's legal name to open a business bank account.

• Use your business name to install a business phone line.

• Register with Dun & Bradstreet to get a D-U-N-S number. This number is free for businesses.

Business credit bureaus may use your D-U-N-S or EIN numbers to analyze your business's activities and payments when they're reported, while business credit-scoring systems can use the information to create scores.

4. Obtain a Business Credit Card and Only Use Vendors That Report

You will need reporting from vendors and other accounts that report to the credit bureaus to build a business credit profile. A business credit card may provide rewards programs and other benefits that could be instrumental for business owners. 

5. Pay Your Vendors In Advance

The Dun & Bradstreet PAYDEX score is a highly used business credit score that's based on your business's payment history relating to vendors, and it ranges from one to one hundred. Paying your vendors and suppliers early can get you a higher PAYDEX score.

6. Monitor Your Business and Personal Credit Reports

Don't be caught off guard or inconvenienced by fraud or errors on your business credit file. This can negatively affect your business credit, so it's important to check your business credit regularly.

Next Steps 

If your business requires a new source of funds — to grow or save your business, satisfy payroll, acquire new customers, or, if you just need help managing your company's cash flow, call us today at 281.646.2905 or complete our contact form right here. 

The staff at Crown Financial, LLC look forward to working with you so that you can work on boosting your business's creditworthiness. In the meantime, check out our blog over here.

How To Choose Customers Wisely To Scale and Grow

Let’s face it, when we think about scaling and taking our businesses to the next level, clients are usually not the first thing that comes to mind. We think about how to improve our brand visibility, what ad campaigns to run, and new ways of attracting more prospects. However, customers are at the center of the growth of any successful business.

Finding out who your clients are and what they want is the first step to scale and grow. Loyal customers will ensure that you grow since they will keep bringing you business and will refer their friends to you. 
At Crown Financial, LLC, we work together with you to develop a strategy that will help you and your business grow. We have put together a list of top tips on how to choose your customers wisely and take your business to the next level.

Develop a Good Business Relationship With Your Clients

One of the most important things you need to work on is a good business relationship with your clients. Most people do not think about how they relate with their clients, and it messes them up. Before you get started on other areas of your growth strategy, ensure that your clients feel valued and understand what you are all about. It is this information that they will use when they market your products or services to other people.

Settle for Clients That Have a Great Reach and Online Presence

The clients you attract will either bring in more business or make you stagnate. It is vital that you take a look into your client's background. Find out what type of industry they work in and their influence in such areas. Such research is vital because it is what will determine your marketing strategy. It will help you target the right crowd with your products and get good feedback from them.

Go For a Client Who Listens to Your Suggestions

The phrase the customer is always right does not always apply in all situations. There are times when the customer can be wrong. A good customer is willing to admit that they do not know everything and can sit down with you and listen to your ideas. Such clients end up being long-term clients. 
They work with you, not because they did not have other options but because they believe in your vision and theirs being related. They also make your interaction with them easier, which goes a long way to ensure there are no hitches in your working relationship. No one wants to keep going back and forth with a client.

Create a Product That Provides Value

One of the things many businesses miss out on is creating something that is of value. Take your time and delve into extensive research on the product or service you plan to sell. Do not skip or rush over this process since that is what will determine whether you succeed or not. Ensure you have quality products or services that your target clients cannot get anywhere else, as this will keep them coming back. Also, ensure that you minimize the cost of production. In doing so, you can price your products right and still make a profit in the competitive market.

We Can Help

One of the struggles any business faces is stagnation. You are not alone if you feel like you have been working on your business and have seen no growth. At Crown Financial, LLC, we work to ensure that you experience growth on a huge scale. Contact us today on 281.646.2905 or reach out to us on our site here to see how we can work together. You can read our blog to get more ideas on how you can choose a client that makes your business grow. 

Invoice Software To Better Manage Your Business Cashflow

Manual invoicing usually has errors, and a simple error can lead to huge losses. But when a business uses the best invoicing software, it can develop and customize invoices, manage and process payments electronically and give reports that help in hassle-free tracking of finances and invoices.

Invoice software is a tool that can automate business invoicing operations. The tool helps lower manual entries, enhance accounting accuracy and save your business a great deal of money and time.

This article highlights ten invoice software to improve your business cash flow management.

1. QuickBooks  

QuickBooks incorporates both business and banking solutions. The invoicing software auto-fills invoices with customer details and schedules invoices in advance.  It also allows businesses to create, send and monitor invoices from various digital devices. The major drawback of QuickBooks is its limited flexibility, including not allowing users to enter the negative invoice.

2. Wave Accounting  

Wave Accounting is cloud-based software that eases business accounting processes. It is accessible from anywhere, and you can integrate it with other tools and software. Wave Accounting focuses on small businesses; thus, users won't come across cluttered and complex software that is difficult to understand.

3. Hubspot

Hubspot continues to outshine most CRM tools available in the market. It is a great all-in-one business solution with hubs for customer service, sales, and marketing. Besides, it has tons of business tools, including invoice template generator, blog idea generator, email signature generator, free business templates, and more. Although HubSpot is not a true invoice software, it allows businesses to send quotes, and customers can pay the quote if you link it to Stripe Payments.

4. Accelo  

Accelo is a flexible and robust software for all project management needs. The software allows businesses to manage projects against budgets, schedules, and available resources conveniently. Its arrays of features include resource management, client portal, task management, status tracking, time and expense tracking, and percent-complete tracking. The only downside with Accelo is cumbersome processes which make it feel like tasks are taking longer.

5. Freshbooks  

Freshbooks helps businesses build and send invoices online and get faster payments. This free invoicing software lets you know when customers view your invoices, monitor overdue invoices, charge late payment fees on invoices, auto-schedule payments, and more. However, the software needs improvement to carry an overdue balance to a new invoice automatically.

6. Bill.com  

Bill.com automates and digitizes accounts payable and receivable processes. This accounting solution can capture invoices, manage cash inflows and outflows, approve payments, and monitor back-office financial operations. However, the accounting software needs integration with purchase orders to easily match with an invoice without needing a PO clearing account in the software.

7. HoneyBook  

HoneyBook is a reputable client monitoring solution that helps businesses manage payment processing and contracting and help users communicate and collaborate. It helps you overcome challenges, including managing multiple vendors, writing paper checks, signing and collecting countless contracts, and other business issues. Unfortunately, businesses that wish to export client data may not like HoneyBook.

8. Square Up  

Square Up is a payment solution that aims towards simplifying and redefining the invoicing procedure for growing businesses that wish to spend more time innovating and less time developing, sending, and tracking invoices. It is highly responsive, thus allow quick invoicing and payments. The downside in Square Up is its minimal and inaccurate reporting.

9. BitPay

BitPay is a great deal for your businesses, especially if you use cryptocurrency payments and deposits. You can also integrate it with existing systems via cryptography secure API. Unfortunately, it has limited customer support and might be difficult to reach out for assistance in case of payments issues.

10. CoinPayments

CoinPayments is another great platform for businesses that accept crypto payments. It accepts Bitcoin and many other digital currencies. Businesses benefit from the Point of Sale function that allows customers to make in-person payments and the shopping cart plugin. However, this platform has a private key managed by a third party (wallet platform), although you encrypt it with your password.

Wrapping Up 

Cash flow is great for any business, but outstanding invoices can suppress it. Luckily, companies can consider invoice factoring, whereby they sell some or all the outstanding invoices to a third party to improve revenue stability.

At Crown Financial, we help businesses turn their unpaid invoices into cash. Call us today at 281.646.2905 or visit our site to see how we can work together to boost your brand. You can also check our blog for more information.