Credit Repair You Can Do Yourself

Credit is the financial lubrication that keeps your business vital and growing. Without credit it’s much more difficult to meet the demands growth places upon your business. As it grows you’ll constantly need more of everything; inventory, staff, plant, equipment, training, travel, vehicles and fuel. All these expenses add up and without sufficient credit, you’ll be reliant on cash flow or investors to finance your growth.

How do most businesses afford their growth? The answer is credit, and it is all but impossible to fund any sort of growth without it, except for businesses with extraordinary cash flows. You don’t need a finance degree to realize that if your expenses increase every month because of additioinal production or field requirements, you will need to pay for that from the prior month’s revenues. How to do that is the problem. If, for example March sales are $70,000, but your sales for April are on pace for $80,000, you will need te requisite capital to support the $80,000 figure, inclluding labor, production, and inventory expenses . If you are primarily in the B to B arena, many of your customers will expect to be on account. These other businesses (your customers) pay their invoices on a certain day every month. In effect you’ll be extending them credit. At times, that can exceed 30 days, depending upon your invoicing practices and their billing cycles.

On many occasions your customers will pay their invoices on the tenth of the month for invoices they received before the 26th day of the prior month month. Unfortunately, you could be giving them the equivalent of 45 day terms instead ofthe 30 day terms as it states on your invoices if, for example, you invoice them for products or services on the 27th of May. Since you won’t get paid for that invoice until the 10th of July, you are extending them 44 day credit terms, and not charging them for it. That is a powerful advantage your business can offer that may help you in a competitive situation .

Credit is the way most businesses tackle these issues . Small business credit comes in several different flavors . The most common source for many small business owners is credit cards . Many actually started their companies using this sort of financing. There are advantages to credit card financing. It’s easy to get, unsecured, flexible, and many vendors accept them.

The problem is that business credit cards aren’t usually the best source of credit for a small business. They have high interest rates , have short duration payoff terms, and a larger problem for many businesses, have relatively low limits. Credit cards typically will not allow you to finance large capital acquisitions for plant and equipment, either . Credit cards definitely have their place in small firms , but they’re better suited for smaller expenses, such as travel, fuel, miscellaneous materials, car insurance, and other similar purchases.

A line of credit is a better financing solution than credit cards for most small and medium sized businesses . They share many advantages , such as flexibility, and only paying for finances you really use . It is basically a reserve pool of funding your business can access as it needs. Common uses are for seasonal inventory purchases or staffing, vehicles, machinery, large capital projects, and other large, extraordinary expenditures.

Lines of credit are available in either secured or unsecured varieties. Giving the lender some collateral as security that the credit will be repaid in a timely fashion will usually allow a lower interest rate , but you will have to, as the name suggests, secure the credit by providing collateral. Typically, real estate is used for collateral . In the case of most small businesses, the owner(s) home is far and away the most common source of security. While this does buy a lower interest rate , having one’s home on the line, with all the tension it can imply, is no free lunch. In many cases, the business’s assets can be used as collateral, but in the case of a relatively new business, there may not be sufficient assets for this to be an option.

Unsecured lines of credit avoid having business owners sign away the rights of any assets for collateral. A business owner must carefully examine all factors to determine if the lower interest rate makes this a viable choice. In many cases the strength of the business will render the difference in the interest rate relatively small. If the company has proven itself over time, and has a solid history of profitability, an unsecured line of credit will probably be the preferable choice.

There is no doubt that credit is the financial grease on the skids of companies large and small . The largest conglomerates use it every day to run their massive operations, and many of the smallest neighborhood shops do likewise. Will you choose to take advantage of it to grow your business and increase your profits? That’s a determination only you can make

Discover how to make credit work to grow your business and increase your profit , starting right now at the Unsecured Business Line of Credit Guide

Recommended Reading

• credit repair
• 5 Credit Repair Tips for 2011 & 2012
• Woodbridge Credit Repair | 703-494-4848
• Hood Estate Credit Repair Services
• Credit Repair is Dead. Fire your credit repair company. How to credit repair, for free, on your own.
• CREDIT REPAIR PLUS CREDIT REPAIR ATLANTA CREDIT REPAIR NEW YORK CREDIT SWEEP ERASE BAD CREDIT