Most businesses will have to borrow money at some point, and it’s vital that you know how to manage credit properly. If you don’t, your debts can quickly spiral out of control and you’ll find yourself in a very bad financial position. If you handle credit in the right way, it can create new opportunities and help you drive your business forward, but when it’s handled in the wrong way, it could kill your business entirely. With that in mind, here are some simple tips for managing credit as a small business. 

Only Borrow What You Need 

One of the biggest problems with debt is that it can be so easy to get into. When you borrow money, it’s very tempting to want to borrow as much as you can, but this can end up being a huge mistake. The more money you’re borrowing, the harder it will be to repay and if you borrow too much then your debt will spiral out of control. You need to be realistic with what you borrow, and make sure only to borrow what you really need, even if the bank is willing to offer you more. Use this loan calculator to help you work out monthly payments and interest so you can determine what you can afford to borrow.  

Use A Credit Control Service 

One of the best ways to manage your credit and keep on top of who owes you money is to use a credit control service. Professional accounting for SMEs often includes a credit control service and this can be such a valuable tool. They can help you with tracking invoices and making forecasts so you can make more informed decisions about your credit and avoid any serious problems. By helping you manage your finances more effectively, they can reduce the need for further borrowing in the future. 

Build Your Credit Rating Up

Credit is going to play a big part in how your business grows and succeeds. As such, you need to make sure your credit rating is as high as possible. If it’s low, then this could put creditors off from lending money to your business and prevent you from taking out certain types of credit. One way to build up your credit rating is to be responsible with the credit you have on offer and make sure all of your repayments are on time. If you can do that for a few years, then it will give creditors a good indication that you will pay them back if they lend you more money in the future.

Chase Up Invoices

As a business owner, you have so much on your plate. You might find it hard to keep track of chasing up all of your invoices, especially if they are spread out across many different customers. To help you stay on top of things and stop any cash flow problems from arising, it’s worth looking at credit control software. This will make it easy to keep track of every customer’s invoice, along with their due dates and whether you’ve received any payments. If people haven’t paid up, make sure you chase them for the money right away. 


These tips will help you manage your credit more effectively so you don’t get trapped in a cycle of debt.