Can the Creditworthiness of Your Customers Impact 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.

How Creditworthiness Impacts Your Business

The second scenario described above has a much larger impact than most business owners realize. For instance, if you knew that one of your customers had low or imperfect credit due to how they handle finances and invoices, how would it influence your decisions and your relationship with them? Would you send those customers invoices, knowing that payments might be late? Or worse, that the invoices might age out to collections? How would you guarantee prompt payment after sales were made?

Getting Insight into You Customers’ Credit Ratings

The ability to see the creditworthiness of customers and other businesses is not reserved solely for banks and other financial institutions. At Single Point Capital, we provide a suite of tools to our clients so they can check on the credit of their customers. Credit checking is available to everyone who signs up for our factoring services, and can be accessed through our web portal. Single Point Capital is committed to providing comprehensive factoring services, which means we go above and beyond to give our clients the tools necessary to help them manage their businesses. Contact Single Point Capital today to learn more about our factoring services and web portal tools.