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For your credit rating, knowledge is power

C&F credit rating

Knowing what’s in your company’s credit profile and how the business is rated or scored is paramount to both short- and long-term success.

Securing or viewing a copy is easy: simply contact Blue Book Services for its report, and to the other credit rating agencies, as they serve different purposes and users.

It behooves business owners to review and understand what their credit profiles say about them on an annual basis. Such a review includes everything from company name, location(s), and contact information to licensing, ownership, and how the company operates.

Check trade detail too—disputes and special terms may be the result of some slow play, but if negative detail seems abnormally high and cash flow hasn’t changed, it’s worth checking into.

“Without a good credit rating, you won’t be very competitive,” said John Harris, president of Paradigm Fresh, Inc. BB #:295982 of Fort Morgan, CO. “I pull my credit report to make sure nothing weird is happening.” He ensures company data is correct and checks that trade references are accurate.

One way to keep profiles accurate is to provide credit bureaus with annual financial statements and references. Managing all the moving parts of a business requires proper planning and discipline.

There is no question it can be a cumbersome and sometimes overwhelming task, but paying proper attention and maintaining the credit profile, score, and rating is a necessary part of running a business.

Manage to improve
The most important thing a company can do for its credit profile, rating, and score is to pay bills on time. A good payment history will help improve an overall credit profile and the ability to get needed capital at an affordable rate to grow the business.

“Our company has always tried to pay our bills as responsibly and as quickly as we can,” says John Russell, president of J.E. Russell Produce Ltd., BB #:115731 in Toronto, ON. “It gives us a good reputation in the industry and a rating that is attractive to new suppliers.”

Vendors and creditors that report their experiences will affect a company’s credit profile, score, and rating. If business partners are not reporting experiences to credit bureaus, ask them to do so—it benefits the recipient company, the responder, and the industry.

In addition, keep the debt utilization ratio low. Any business with a debt-to-available credit ratio nearing 30 percent should take steps to lower the ratio. Examples include requesting a higher limit on credit cards, paying faster, making larger payments, or opening a new line of credit with a bank or vendor.

This is a multi-part Credit and Finance feature adapted from the October 2019 issue of Produce Blueprints.