Kasfia Rashid - “Money Matters with Kash the Bookkeeper”
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Hello! Welcome to Money Matters- Ask the bookkeeper series, the accounting show answering burning accounting questions! You know, the ones you would only ask your best bookkeeping buddy!
Each show will have one main question from the audience with supporting questions from my various travels. Have a question to ask? Don’t be shy, step right on up! You can submit your questions directly to Hello@kashthebookkeeper.com! You may hear your question aired live across the globe! Last week, we discussed the first tough lesson of entrepreneurs- the cash reconciliation.
The last two weeks were focused on the Assets section of a balance sheet. Today we move on to the Liabilities section! Need a refresher on what a liability is? Check out Seasons’ 3 show here : https://pod.co/money-matters-with-kash-the-bookkeeper/1-money-matters-liabilities-the-untold-story-of-debt-kasfia-rashid
This week’s questions are: How do I build business credit? What are some different ways of building credit? Why is business credit so important?
Show Objectives - The Why
Building business credit is similar to building personal credit. In its simplest form, it is exchanging trust and confidence for money. In the financial industry we translate trust and confidence into numbers, a lot of numbers. Credit scores, Ratios, and Interest Rates to name a few.
Building trust and confidence in the business world becomes pivotal to growth, scalability and can result in increased selling price of your business- aka, goodwill! Having ready and able access to cash reserves and credit can mean the difference between a strong, thriving business and one that remains stagnant.
What You Need to Know - The What
Business credit lets a company borrow money that can be used to purchase assets to increase revenue, pay for large expenses such as payroll, and control their overall cash flow. For business owners, having a separate legal entity, such as a corporation or limited liability company, provides the unique ability to create a business credit profile, which is then used by credit grantors to determine if they should lend that business credit or not.
There are several different types of business credit, not just credit cards! According to the Small Business Association1 there are an additional four other types of credit:
What You Need to Do - The How
So how can you get started? Good question. Since the SBA has been so helpful, let’s see what they recommend! In their blog they supply five simple steps to building business credit quickly!2
It’s equally important to establish a diversity of accounts with other types of business credit such as a business credit card or line of credit. Let these five simple steps serve as a starting point to building business credit for your company.
Cited Articles :
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Next: How do I put a debt schedule together?
Written by Kash the bookkeeper
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