| |
|
|
|
Randall & Payne partner Will Abbott explains the pitfalls and how to avoid them...
"Business directors are used to seeing their clients’ and suppliers’ credit ratings these days due to the economic climate, but do they ever stop and check their own? More and more SME businesses in Gloucestershire are finding that when they go to open a new account with a supplier they are declined with no reason given. If the company’s well run and remains in profit and has never defaulted on any payments you would think a credit check would come back fine... but this is no longer the case. Credit reference agencies such as Experian base their credit rating upon all of the data taken into consideration on your trading business. It is then used to assess the likelihood that credit will be repaid punctually. Part of this credit rating formula is how well businesses such as your own, based on turnover, size, and operating market sector, have fared over the past 12 months. Due to the downturn many sectors have been hard hit, including marketing and advertising, UK trade manufacturing, service industries and construction."
Will's six tips to keep up your company’s credit rating:
1. Retain profit in your business. This will increase your net worth each year and shows that more is being retained and invested in the business, which is king!
2. Maintain a good trading track record and good supplier relationships. Pay suppliers within agreed terms - in today's economic environment more and more trade payment data is used by credit agents as a guide to current credit worthiness.
3. Provide detailed information to credit agencies such as management or interim accounts and additional trading information.
4. Keep your filing up to date. Don't delay in recording changes of directorship and keep within the statutory filing requirement period of nine months for private limited businesses (from your financial year end).
5. Review your share capital. How much credit would you offer to a company where the shareholders are only prepared to put two £1 shares at risk? Have you, as a director or shareholder, loaned the company money which you have no intention of redeeming? Consider capitalising the loan - this will increase the net worth and most likely will have a positive impact on the credit rating.
6. Avoid negative information at all costs. County Court Judgments, decrees, petitions for winding up - no matter what the outcome - will have an impact on your rating.
For more information and advcie, call Will Abbott on 01452 723377 |
|
|
|
|
|
Copyright © Randall & Payne Chartered Accountants. All rights reserved.
Randall & Payne is a brand name of Randall & Payne LLP. Registered in England & Wales number: OC345710.Rodborough Court, Stroud, Gloucestershire GL5 3LR.
Unless otherwise indicated we use the word partner to refer to a member of the LLP. Registered to carry on audit work and regulated for a range of investment business activities by the Institute of Chartered Accountants in England and Wales. A member of the ICAEW Practice Assurance Scheme. Google: Tax, VAT, Corporate Finance, Management consultancy, business advisers, accounting, business planning, business advice, accountants, accountant, adviser, Gloucestershire. Site by IsaacPartnership |
|
