3 Things To Check On Your Credit Company Report
Credit reports and credit ratings are two things that commonly come up when looking at commercial borrowing. There is a fair amount of understanding about personal credit reports, the likes of Experian and Equifax provide these and explain them pretty well.
The challenge I find is with company credit reports.
Generally there is less awareness of what to look for, so here are 3 essentials things to check on your company credit report.
Many suppliers will automatically report your payment history against their stipulated terms of payment. Your payment performance is then reported directly into different credit reference agencies. Many suppliers won’t even know this happens as all reporting is done via a small piece of software, usually attached to the bookkeeping or accounting package they use.
It all sounds pretty streamlined and a good way to record things, after all knowing someone’s payment performance would really help when doing business with them.
The problem starts when the supplier doesn’t report their own payment terms correctly, reports different terms within their bookkeeping system than on their invoice or has agreed verbal terms with you that they don’t input into their systems.
Point One – Check your payment terms, where they look wrong then raise it with the credit reference provider and take it up with whoever reported the data.
Sounds simple doesn’t it? Checking the names of the directors of your own company. Actually it is a little more common a problem than you may think.
I had a client this month who had problems raising finance. Once I got past the basics the real issue preventing them being able to borrow was the director details held at companies house. The main director had an incorrect spelling of their first name and the wrong year quoted on their date of birth.
What this meant was that lenders couldn’t find the director at Companies House, couldn’t tie up the details given with what was being reported and therefore declined to lend.
The surprising thing here is that you need to check the details regularly. Every Annual Return submitted could see changes made to the details held, so don’t assume you look once and it will always be correct.
Charges are interests in your company that have been registered against your company. Typically these are done by lenders, landlords or someone who has an exposure to your company.
Charges are not a bad thing, all pretty standard as any business matures. The thing to check is that they are removed when no longer necessary. Banks are prime examples of this.
Take the example of having had a bank loan which is now repaid. When taking the loan your bank would have registered a ‘Debenture’, ‘Fixed & Floating Charge’ or ‘Charge over Property’ depending on whatever arrangement you had with them. Once the loan is repaid most borrowers think that is the end of things, however it is common to see the security taken by the bank being left in place. This is an administration thing only, banks tend to leave their security in place as it can only benefit them, they also see it as practical in case you ever want to borrow again.
Where it becomes a problem is when you want to do something quickly. Recently I had a client who wanted to raise capital against their premises, the money was needed quickly. Only when the credit report was properly looked at did some old bank security flag up as outstanding, getting it removed took 3-4 weeks when had the credit report been reviewed earlier then the new loan could have been done and dusted inside a couple of days.
The advice, go check the Charges and if they are out of date then get them marked accordingly by contacting the lender concerned.
How To Check Your Company Credit Report
There are plenty of options for you to use, the best options change so it is much easier to Google it and see what comes up. If you want to know how things look now then get in touch and I will send your company credit report to you.
For any comments about this post then add them above, for anything else then please get in touch.
By Dave Farmer