Why is your business credit rating so important, especially right now?

Today’s economy runs on credit. If you want to a loan to grow your business, tendering for work or have credit with your key suppliers, you’re going to need a good credit rating.

Any drop in credit rating, especially without planning for it, can halt trade overnight in some cases.

Do you know what your business credit ratings are? And when did you last check them?

Do you understand the impact your year end accounts can have on this?

Statistics indicate that more credit reports are being run than ever before. If you don’t keep a close eye on your credit rating, how will you know if it’s a misrepresentation of what it should be? Will it be too late to improve it and get a good deal from a lender or favourable payment terms from suppliers as we enter a tricky cash flow season?

Get a free credit insight covering the main UK credit agencies

Read below for some of factors that negatively impact your credit score and tips to improve it.

What impacts your credit score?

1. Filing your year-end accounts

When you submit your year-end accounts to Companies House, credit rating agencies register it and review your credit score. The change in credit score can be huge! Here are some items to look out for in your year-end accounts that impact it:

  • Reducing cash value
  • Net current liabilities
  • Net liabilities (a negative balance sheet)
  • Late filing of accounts

All of these factors could have a negative impact when your business’s financial position is assessed, so we recommend keeping an eye on each of these figures throughout the year with particular importance towards your year-end.

Most of our clients have Pre-Year-End meetings, not only to maximise their tax savings but to plan for the year ahead including checking for things like this that can have a huge impact on your credit score. Book your Pre Year End meeting now or click here for an email reminder when your pre year-end is approaching. 

We wrote a blog on how filing accounts impacts your credit score here which goes into a lot more detail on the impact filing your year-end accounts has on your credit and some tips on how to reduce the impact, including changing your year-end.

2. Charges on Companies House

Charges on Companies House impact your credit score. It’s important you check if you have any charges on Companies House and if they are satisfied.

3. Late payments

Paying your suppliers on time is a key part of your credit profile. Ensure you always meet agreed terms with your suppliers.

4. Out-of-date information

Credit agencies check various sources, such as Companies House to confirm that your business is genuine so, ensure your business is listed online and the company registration details are accurate and up to date, and that accounts are filed on time.

If your management information is out of date, credit agencies, customers or suppliers may be judging your credit rating on data that is 2 years out of date.

What is impacted by my credit score?

Now more than ever your ratings matter. These have a direct impact on:

  • Access to funding
  • Credit terms from suppliers
  • Tendering for work
  • Accessing best rates for utility contracts
  • Lending interest rates paid

How can I improve my credit score?

  • Ensure payments made to suppliers are timely
  • Filing accounts and confirmation statement on time
  • Consider directors prior history ahead of appointment
  • Engage with us on how we can support in improving your credit rating
Request your free credit insight report now
As we enter the season of corporation and income tax payments and continue through the cost-of-living crisis, it’s more important than ever that you keep a clear eye on your credit score. Get a free credit insight covering the main UK credit agencies and get in touch with us so we can discuss your credit rating and how we can help you.
Alternatively, email enquiries@a4g-llp.co.uk.