How Creditworthiness Impacts Your Business

We all know that credit ratings impact business owners. The creditworthiness of a business is what determines loan amounts, interest rates, the ability to make big purchases, and more. But how can the creditworthiness of your customers impact your business?

Creditworthiness and Cash Flow

A business that maintains strong credit ratings does so by not overextending its purchasing power, and by paying invoices on time. On the other hand, businesses with low or imperfect credit signal one of two things. First, the business may be new, and has simply just not had the time to establish a financial history and build up their credit ratings. Second, the business might be lax in paying creditors while making large purchases. This second point can easily lower credit ratings, plus it could lead to cash flow issues, creating a loop where the business is unable to make payments on loans, utilities, and invoices. (Click Here To Learn More)