How Your Personal Credit Score Could Affect Your Business

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StrategyDriven Managing Your Finances Article |Personal Finances |How Your Personal Credit Score Could Affect Your BusinessWhile your business and you can be two different entities, your personal credit score can affect your ability to do business in a wide variety of ways. But there is one area where it will affect you the most, and that’s when trying to get financing. Most institutional lenders will look at your personal credit score first if you haven’t had the time to build your business’s credit, which could make getting capital early on very difficult.

Thankfully, there are things that you can do to circumvent these obstacles and still have a chance of getting financing for your business. In this article, we’re going to show you the exact effects of bad personal credit on a business, what you can do about it, and how you can build your personal credit as fast as possible.

Why is My Personal Credit Score So Important?

A lot of business owners assume that their personal credit score will have no effect on their business. While your business credit score and personal credit score will be calculated differently, your personal credit score still says a lot about you. Ultimately, how you treat your personal credit will be used as an indicator of how well you manage your money in general to financial institutions. After all, if you can’t manage finances in your own life, how can you expect them to believe you’ll be able to manage them in a business?

In addition, there’s really nothing else institutional lenders can go by when assessing your creditworthiness. The only way they can tell is by looking at your credit score, which is pretty much like a financial report card. It also gives them a glimpse into your character, hence why some employers will ask for access to your credit report before they hire you. Your credit report is just another factor in the balance they will use to evaluate not only your ability to repay but what kind of person you are.

Your Credit Score Doesn’t Hold the Same Weight in Every Situation

However, you should know that your personal credit score will not be as important with all lenders. For instance, angel investors or venture capitalists may not place much importance on your credit score. They may look at things like revenue, margin, viability, and even your personality and knowledge of the business first.

On the other hand, if you were thinking of getting an SBA loan, your credit score will have to be at least 680 to even apply, and other factors will be used afterward. The same goes for term loans, or what people usually think about when talking about business loans. Credit score requirements will usually be around the 680 mark as well, even though they might vary from institution to institution.

If you have steady cash flow but didn’t have time to build your credit history yet, short-term loans might be a good option for getting fast cash approval when a business requires funds in urgency. Short-term lenders will usually put more importance on business revenue over your credit score and might be more lenient. However, note that the interest on these loans is usually much higher and that you’ll have to deal with shorter repayment periods as well.

Invoice factoring is another way to get advance money for urgent expenditures, but not really for long-term financing. Invoice factoring allows you to get an advance on an invoice due in exchange for a fee. In this case, the invoice will be used as collateral for the loan, so your business won’t be as closely scrutinized as with other options.

What Can I do to Repair my Credit?

There are plenty of things everybody can do to correct their report history. The first thing is to take account of your current financial activity and commit to adopting more responsible payment habits. That could mean setting up automatic payments on your bank accounts and taking steps to fix accounts that might be delinquent.

You should also make sure that you get a copy of your credit report from all major credit reporting agencies. You are entitled to one free copy of your credit report per year from the three major credit bureaus: Experian, Equifax, and TransUnion. This will not only give you a clearer view of your accounts but help you to see if there are any errors there that could negatively affect your credit.

For instance, in some cases, an account that you paid off may not have been reported as such on your credit report. Or you may find that someone opened a credit account under your name without your permission. If that is the case, you could put a credit freeze on your account and stop any other inquiries to make sure no other demands get through. Once this is done, you can follow the dispute process and get these errors removed.

Adding new tradelines to your credit is also a great way to build or fix your credit. Tradelines is when you add any new credit account to your report. One of the easiest ways to do so is to apply for a secured credit card. A secured credit card will allow you to get approved by leaving a certain amount of money as collateral. The credit amount will usually be equivalent to the money deposited, but the issuer might decide to increase your limit if you have a good history or upgrade you to a regular credit card later on.

Fix your Credit By Buying Authorized Tradelines

Another thing you could do that a lot of people aren’t aware of is actually buying positive tradelines that will be added to your credit account without even applying for credit. Some services will allow you to pay in exchange for being put as an authorized user on someone else’s account. When you become an authorized user on someone account, the account’s activity will be reflected in your report, which will have a positive impact on your credit score. This is why it’s very important that you know what makes for a great tradeline and which one you should avoid. If you want to know how and where to buy tradelines, you can check this article to learn more.

Conclusion

Less than stellar personal credit can and probably will have an effect on your chances of getting financing early on as a business owner. However, with the tips we just provided, you should be able to fix your credit situation and gradually improve your creditworthiness with potential lenders.

What Are the Benefits of Electronic Payment Systems for Business?

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StrategyDriven Managing Your Finance Article |Electronic Payment Systems|What Are the Benefits of Electronic Payment Systems for Business?An eCommerce payment system is also known as an electronic payment system, which is a digital transaction or paying for goods using electronic medium and eliminating the requirements of cash and checks. An electronic payment system is a globally popular payment technique due to the continuous usage of internet-based activities like baking, shopping, etc.

Modes of Electronic Payment

There are several online payment methods, such as smart cards, electronic wallet bank transfers, credit cards, bitcoin wallets, etc. In contrast, e-payment is classified into two categories, i.e., credit payment system, and cash payment system.

There are several online payment methods offered by companies like cardknox, such as smart cards, electronic wallet bank transfers, credit cards, bitcoin wallets, etc. In contrast, e-payment is classified into two categories, i.e., credit payment system, and cash payment system.

Credit Payment System

  • Credit cards; according to branding services UK, the credit card is the most primary form of e-payment system used by billions of people; in this mode, financial institutes provide a card to the account holder for making payments online through electronic devices.
  • E-wallets are also one of the leading techniques of online transactions in which a prepaid account holds user financial data used to make payment.
  • Smart card; smartcard is an advanced technology of transaction known as integrated circuit card or chip card (ICC or CC), which have a microprocessor to store money deducted when online transactions happen using that card.

Cash Payment System

  • Direct debit is a mode in which the account holder allows the bank to pay the amount from his bank account electronically.
  • E-check; e-check is one of the most valuable digital transactions of money from an account for paying for goods eliminating paper checks.
  • E-cash; in this method, a specific amount is saved on the customer’s device for accessible online transactions.
  • Stored-value card; stored cards are used by many well-known companies and businesses known as gift cards, in which a card with a certain amount is used for the transaction.

Benefits of Electronic Payment System for Business

In the globalized world where technology is constantly evolving and developing, around 3.8 billion consumers use the internet actively has changed business dynamics.

According to branding services in the UK, the continuous advancement of technology has changed the traditional payment system into an electronic payment system that can grow business efficiently. With the revolution of the electronic payment system as they are easy and straightforward for making payments. Moreover, they have eliminated the requirements of going to banks for transactions and other activities. Here are few benefits of an electronic payment system for business.

1. Instant Payments

Life has been chaotic where everyone struggles with work, relationships, finance, health, and many other things. The traditional method is a hectic and stressful process as they are often a slow and time-taken process. The electronic payment system eliminates chaos as they are faster and straightforward, like credit cards, e-cash, etc.

Electronic payments can be made through an electronic payment app from anywhere by deducting the need to go to banks by saving time and energy.

2. Higher Payment Security

With the expansion of businesses into the online world, one of the most significant concerns of any firm is security. Payment security is the prime need of a company to protect client’s data and information from frauds and other issues.
The electronic payment system is leading globally because of several reasons why security is one of the main reasons. It provides a higher level of payment security for clients by offering multiple encryptions, SSL, tokenization, etc. Clients don’t have to swipe cards again and again as they can save card details using One Time Password.

According to surveys, some organizations don’t utilize e-commerce payment technology and are stuck at traditional payment methods; that’s why they are having security issues and lack the opportunities to serve a higher number of consumers.

3. Better Convenience

Providing convenience to an audience is essential for business from that customer decides whether to engage with a company. According to experts, convenience is a vital aspect of growing a business, and electronic payments provide higher security; more importantly, they offer better conveniences to clients to achieve a better user experience.

It allows clients to purchase excellent using card facilities and paying later. Moreover, it doesn’t annoy consumers by sending several reminders and messages for payments and automatically collects the specific money as per rules.

4. Saves Processing Costs

Processing cost is a term of cost accounting used in manufacturing units for assigning and collecting cost. It takes the total cost of the process and averages it over the branches of production. For instance, when you offer payment service to clients, you need a card processor; and that processor allows payment transaction in exchange, it will charge an expensive cost value.

But electronic payment does not charge expensive cost values; you have to pay a fixed subscription according to the agreements and rules to your service provider.

5. Low Risk Of Theft

In the modern era of technology, business dynamics are swiftly changing; according to statistics, money is the lifeline of a business. The capital is essential for the company and day-to-day life. However, using cash for accepting payments is quite risky and against safety. As the crime rate is gradually increasing, several chances of getting stolen and even depositing money in a bank account are pretty unsafe.

Using an electronic payment system reduces the risk of theft by providing safe and secure payment transactions. Moreover, it gives all transaction records by the end of the day.

6. Transparent

According to branding services in the UK, transparency is an essential factor for a business; consumers are more concerned about their privacy and are willing to protect it. A study found that over 50% of consumers would switch companies simply because of their data policies or data sharing practices, which fail to secure consumer data. They will lose the interest of their customers and lead them to find another company where they feel more secure sharing their personal information.
That’s why the electronic payment system provides transparency by offering you details of transactions for a better user experience.

7. Contactless

Due to the Covid-19 pandemic, people avoided human contact for safety; this increased the need for contactless payment transactions.

The electronic payment provides POS terminals and QR codes to avoid human contact; in this method, the payee holds a cellphone near the terminal, and the payment will automatically proceed.

8. Reduces Carbon Footprint

With eCommerce payments systems, the use of paperwork has been reduced, for instance, paper receipts. Modern payment technology offers digital equivalent to the clients by saving money on ink, paper, and printers.

9. Greater Revenue

Every business wants to achieve more significant revenue for business progress and development. According to the latest survey and reports, it has been proven that consumers spend more on buying products and services using e-payments and increases the rate of revenue for business progress.

10. Better User Experience

A business needs to attract customers by providing a better user experience. Electronic payment is the advanced technology that offers a better user experience in terms of a smooth transaction, removes obstacles from purchasing like long queues or a limited amount, no extra cost involved, and furthermore.

Conclusion

According to experts, cash transactions have been decreased due to electronic payment systems; that’s the potential reason that e-payment is considering as a leading facet of a successful payment infrastructure by offering several valuable advantages to clients to increase business progress.

What Are Your Options To Fund a Business?

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StrategyDriven Managing Your Finances Article | What Are Your Options To Fund a Business?If you are thinking about starting a new business, there are a lot of factors that you need to consider. One of the most important factors of how you are going to fund your business. Without capital for your business, it doesn’t matter what else you have for your products and services. You will not be able to pay for inventory, purchase supplies, or pay for marketing. Therefore, you need to take a closer look at the options you have available for raising capital. What are a few of the top options you have at your disposal?

You Can Start by Bootstrapping Your Company

A lot of people get their businesses off the ground through something called bootstrapping. This is the process of taking your savings and using it to get your business through the early stages. The biggest benefit of dipping into your own personal savings is that you will not have to worry about paying anyone back. On the other hand, you probably only have so much money in your savings account. What are you going to do when this money runs out? That is why you need to learn more about some of the other options that are available.

You Can Ask for Help from Family and Friends

If you are looking for a way to raise money for your business, you may also want to consider asking your family members and friends for help. In a lot of cases, they could be willing to offer you a loan without interest. Before you think about taking out loans that have interest attached to them, you should reach out to family members and friends to see if they have any options available. In order for you to run a successful business, you have to learn how to take vantage of your connections. The first connections you need to lean on are your family members and friends. They might even be willing to simply give you money in exchange for a souvenir or prop from your company, such as a coffee cup or a T-shirt.

You Can Look at Venture Capital Options

Another option you might want to consider if you are thinking about ways to raise capital for your company is through something called venture capital, such as Patrick Chung of Xfund. The idea behind venture capital is that you pitch your business and how it works to a board that has a lot of money to spend. Then, if they believe in the premise of your company, they will give you the money they are looking for in exchange for a small percentage of equity in your company. You ought also to have access to experienced business owners and leaders who can provide you with the guidance you need to take your business to meet heights. If you are looking for funding for your business in addition to experts who can help you, this could be an option that you would like to consider for your company as well.

You Can Give Crowdfunding a Try 

You may also want to try something cold Crowdfunding. Crowdfunding is the process of raising small amounts of money from a lot of people. For example, you may want to use a website that can help spread the word about your business. Then, by explaining what your company does, you may have people who are willing to offer you small donations. If you are willing to offer a small souvenir, such as a keychain, you may be able to collect donations for more people while still turning a profit on that small keychain. Consider using crowdfunding to help you raise money.

You Can Apply for a Business Loan

Finally, you can also go to the convention in route, which is applying for a loan from a small business company. Keep in mind that you are going to have to pay this loan back with interest. You also need to convince the lender that your business is going to be a success. If you do not have any other options, you may want to consider applying for a small business loan from a bank or credit union.

Raise Money for Your Business

These are a few of the many options you have available if you are trying to raise money for a business. You need to think carefully about where the money for your business is going to come from. If you do not have enough capital to market and develop your products and services, you will not be able to meet the needs of your customers. Fortunately, there are professionals who can help your business raise the money it needs. If you work with the pros, you can focus on the more exciting parts of your company.

10 Steps to Take if Your Business is Going Bankrupt

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StrategyDriven Your Finances Article |Going Bankrupt|10 Steps to Take if Your Business is Going BankruptIf your business is facing the prospect of insolvency, deciding what steps to take can prove to be incredibly tricky. If that sounds familiar, then the following post should come in handy…

The prospect of going bankrupt is something every business needs to consider. In an ideal world, every business would be successful enough to bring in a steady cashflow and keep themselves operating at a sustainable level. Unfortunately, though, we don’t live in an ideal world!

If your business is in debt and is no longer in a position to repay this, it might be necessary to file a bankruptcy petition (also referred to as insolvency petition). This is where a business has to restructure their company debt, contacting their debtors to arrange manageable payment instalments or liquidate assets to pay off outstanding debts.

In this post, we’ll be informing you on the 10 steps, like these, you need to take if your business is facing insolvency or bankruptcy proceedings. This way, you can be sure that you come out the other side with your business still intact.

10 Steps to Take for Businesses Facing Bankruptcy

1. Take Stock of Existing Debts

First things first, if your business looks to be staring down the barrel of bankruptcy or insolvency, then you need to take some time to account for all of your existing debts.

Take stock of who all of your existing creditors are, how much money they are all owed and when the debts are due to be repaid. This will allow you to effectively plan out and prioritise the debts, which will help to prevent the situation from escalating any further.

2. Contact Creditors Directly to Reach an Informal Agreement

If you’re familiar with your creditors, then it’s certainly worth getting in touch with them directly to see if you’re able to come to an informal agreement regarding your debts.

Whether or not you’re able to come to an informal agreement is context-dependent, but there’s no harm in reaching out to them. There’s always a chance that, if you’re seen to be proactive about the situation, your creditors are more likely to work alongside you, rather than against you in the form of legal action.

3. Always Act to Maximise the Interests of Your Creditors

Becoming bankrupt or insolvent will, of course, have a big impact on your business’s general cashflow and company revenue. However, you need to remember that you should always concentrate your efforts on the interests of your creditors, as opposed to generating your profit.

This will prevent your business from incurring further debts, which will leave your business in an even more precarious position.

4. Keep Your Employees in the Loop

If you have employees under your watch, they have a right to know what sort of situation the business is in. You don’t have to fill them in on every single minute detail (unless they are keen to know themselves). However, you should be open and honest about the fact that you could be heading towards bankruptcy or insolvency.

Your employees will then have a better understanding about what their priorities should be. They may even be able to play a part in keeping the business running and out of further financial trouble.

5. Carefully Consider Certain Assets That Can be Liquidised

If you know that you’re going to struggle to repay your debts through traditional means, or you can’t make a sensible payment structure with your creditors, then you should consider the sorts of company assets that can be liquidised to pay off the debts.

These will usually be assets that can be considered non-essential (for example, company cars).

6. Speak to the Insolvency Service

The Insolvency Service is a Government agency that helps to deliver economic support and advice to businesses who are in financial distress. They focus on tackling any financial wrongdoing and maximising returns to creditors.

They aren’t allowed to give your business any legal or financial advice. However, they’re on hand to give you information about the processes related to bankruptcy, debt relief orders and liquidation.

7. Weigh Up Alternative Finance Options

There are a number of different alternative finance options you can consider for your business if you’re facing bankruptcy or insolvency.

For example, you might want to consider invoice financing. This is where a third-party provider agrees to buy your unpaid invoices for an upfront fee of up to 85 percent of their value. The finance provider then collects the payment from the debtor when it’s due and pay you the balance, minus a small fee.

8. Restructure the Business

You may need to restructure the business in the short term to ensure that your creditors are paid. This will involve everything from looking at your current staff, outsourcing work, downsizing or moving your office premises.

These changes don’t have to be permanent if you don’t think they would be appropriate for the long term – though many businesses find that making these changes are vital for the survival of the business.

9. Enter into a Company Voluntary Arrangement (CVA)

A company voluntary arrangement (CVA) is a formal and binding agreement between an insolvent company and its creditors. This is for the payment of a debt in full, or in part, over an agreed period of time.

They typically last for five years and, for them to be agreed, 75 percent of the company’s creditors must agree to accept the proposal. Once the CVA has been agreed, your business can resume trading.

10. Inject Personal Money into the Business

This is a risky strategy and should only really be considered if there are few other alternatives. Many directors and business owners inject personal money into their business when times are hard, either through a personal loan or a credit card. It’s seen as a sensible approach, according to an independent financial advisor.

Is Your Business Facing Bankruptcy or Insolvency?

And there you have it! If your business is facing a threat of bankruptcy or insolvency, the steps outlined in this post should give you a better idea as to what you can do to ensure that you’re able to come out the other side stronger.

If you’re facing bankruptcy, or have already been through bankruptcy proceedings with your business in the past, why not leave a comment below with your own tips?

Credit Dependency And How To Reduce It

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StrategyDriven Managing Your Finances Article |Credit Dependency|Credit Dependency And How To Reduce ItBeing able to rely on credit to help you make purchases and achieve your dreams is something we are fortunate to have. As saving huge sums can be time-consuming and difficult for some to do regularly, being able to take out a loan or get approved for a credit card helps bridge the gap and speed up the process. However, there can be too much of a good thing, and becoming credit dependent is not an ideal situation to be in. So, how can you avoid becoming credit dependent and what can you do to reduce your reliance on borrowing?

Borrow Only When You Need it

If you are in the habit of borrowing money regularly, whether it be to maintain a certain lifestyle or make purchases you otherwise couldn’t afford, this is a sign you have a credit dependency. Ideally, you should only be choosing to borrow money when you really need to, for example, in an emergency when you have no available savings. Payday loans UK lenders are available for this reason to provide short term help when the unexpected happens. Borrowing this type of loan when you have no other available options is more justifiable than continuous borrowing for non-essential reasons. If you can avoid borrowing money to pay for purchases, this will reduce your credit dependency.

Start Saving More

The quickest way to reduce your overall credit dependency is to boost your savings each month. The more money you have put aside, the less you will need to rely on borrowing. If you are someone on a low income, the amount you can save maybe less than others, but even a small amount is a start. Eventually, you will have enough savings to cover any unexpected expenses or to put towards larger purchases such as a deposit on a property or vehicle. Whilst it can be easy to take out credit for big-ticket items you want, having money you can put towards a larger deposit will help decrease how much in total you need to borrow.

Review Non-Essential Spending

One of the main issues for those with credit dependency is having very little disposable income. If the majority of your income disappears quickly each month, leaving little for anything else, this could indicate your finances are overextended. The best way to find out why is to review your expenditure so that you can discover exactly where your money is going. What many people may find is once their essential bills are covered, they in fact do have disposable income but this has been depleted due to non-essential spending. It can be easy to spend a little every day without realising how much in total you are spending throughout the month. If need be, set a budget of how much you want to save from your disposable income and what you can spend on non-essential purchases. This way, you’ll reduce how quickly you run out of money each month and your credit dependency should reduce too.

Once you become dependent on credit, it can be difficult not to stay in this cycle. The risk can be eventually falling into financial difficulty where it will be even harder to resolve. By taking steps as soon as possible to reduce credit dependency, you can reduce debt and put money towards your financial goals.