Maximizing Your Business Credit: Business Growth with a DUNS Number and Credit Strategies
Paying the bills on time feels so much better than buying the newest gear! However, leveraging business credit to grow your business feels even better.
Do you know what a DUNS number is?
What if I told you there's a secret ingredient that can add a whole new "level" to your financial strategy? Over the past year or so, I've talked to many, many small business owners, and a surprising number of them didn't know what a DUNS number is. Unfortunately, many entrepreneurs and small business owners are not tapping into the full potential of tools like the DUNS number and other credit-building strategies.
A DUNS number, or Data Universal Numbering System number, is a unique nine-digit identifier for businesses issued by Dun & Bradstreet, a central credit reporting agency. This number is more than just an identifier; it's essential for any business looking to establish and build a strong credit profile.
Why is it so important?
Well, think of the DUNS number as your business's "financial fingerprint." It tracks your credit and payment history, helping lenders, suppliers, and potential business partners assess your company's reliability and financial stability. In layman's terms, it's a tool that helps you build a solid business credit profile. Accessing better credit terms, lower interest rates, and increased funding opportunities is essential.
(It's important to note that a DUNS number isn't automatically assigned when registering your business. You must apply for it separately through the Dun & Bradstreet website at dnb.com). But here's the catch: having a DUNS number alone isn't enough. It's what you do with it that counts. Responsible credit management is vital. Some of these include practices like:
As with personal credit, late payments can harm your business credit score, so paying the bills on time is very important.
Use credit strategically and wisely for "growth investments" rather than unnecessary expenses. In layman's terms, you should use credit for investments that will help your business grow, like marketing. It's not for splurging on things you don't really need, like fancy office chairs. The goal is to spend borrowed money on things that will help your business make more money in the long run.
Don't put all of your eggs in one basket–in layman's terms, don't rely on just one type of credit or a single lender. Diversify your credit sources to reduce risk and improve your credit profile. This means using a mix of different types of credit and borrowing from various lenders. You're protecting your business by using different kinds of credit from various places. If there's a problem with one lender, your business won't be in trouble because you have other credit sources. Also, this approach helps you build a stronger credit history, making your business look more reliable and stable to lenders in the future.
Lastly, establishing good relationships with various lenders can open up more credit options. Also, regularly check your credit reports for potential inaccuracies or fraudulent activities.
Overall, it's important to note that credit is not just about borrowing; it's about building a solid foundation or credit profile for your business's future success. A DUNS number is not just a number; it can be a pathway to your business's growth and financial health. By understanding and strategically utilizing this tool, along with sound credit management practices, you can set your business on a path to more tremendous success and sustainability.
