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The importance of understanding your business credit health during COVID-19

by OnDeck Australia,   Apr 09, 2020

It’s fair to say that 2020 has already thrown several challenges at small businesses across Australia. Many are still recovering from the impact of the bush fires and now we’re facing a new set of challenges as the global pandemic and economic crisis of COVID-19 takes over.

We understand this is an incredibly tough time for many small business owners and we, in partnership with your broker, want to support you by providing free access to tools and education that can help protect your business.

There’s never been a time when it’s more pivotal to understand the health of your business, and specifically your credit health. Understanding your business’s financial health of is a key ingredient to building and maintaining a successful business. If you want to access your business credit score, you can through the free Know Your Score service. This is a service that has been used by over 10,000 Australian small business owners.

You might not even know you have a business credit score (53% of business owners don’t!), but the good news is it’s completely free to check and only take a few minutes of your time. Why not check now?

Whether your business is thriving, or you’ve had to close up shop, understanding the credit health of your business is equally important.

It may be that the current environment is enabling your business to thrive, or that you’re adapting your business model to service your customers differently. If this is the case, you may need some financial support to boost your cash flow and enable you to grow at scale. Therefore, it’s essential you know your business credit score. As your broker will be well aware, any lender or supplier giving you credit will likely check your credit score to determine if they want to lend you money or do business with you, as it can indicate whether you’re trustworthy and likely to pay your debts on time. This will then determine the kind of terms they will require for repayment and how much they can lend you – so knowing your score means you and your broker knows the options you might have available.

On the flip side, you might be having to take some time out from your business right now. We understand this is an incredibly stressful situation and really hope you can get your business back up and running soon. However, you can still make the most of having more time on your hands to get on top of your finances and business health, preparing for future success.

No-one really knows when this is all going to subside but, when it does, it’s likely the economy is going to quickly turn and it will be a great time to scale your business again. Once again, you may need funding to help enable you to quickly grow, so take the time to fix up your score now so that it’s an asset for you later.

It is vital you understand and regularly check your credit score for some very important reasons:

  • Check there aren’t any mistakes. Sometimes there is mis-reporting to the credit bureaus or confusion between you and your lender. Remember when you moved premise, changed electricity supplier and cancelled the old one? Maybe they didn’t cancel it as you thought and now your showing as in arrears. It’s easily done and easily fixed through contacting the bureau – but you need to know it’s there in order to do so.
  • Know your credit utilisation ratio. In other words the percentage of your total available credit that is currently being utilised. A good ratio is around 30% or less. A high ratio is a sign to lenders and other institutions that you may be experiencing some form or financial difficulty. If you are above 30%, that’s ok, but at least you and your broker know and are equipped to have that conversation with the lender.
  • Check you’re on top of all your bills. Business owners are busy people and sometimes bills do slip through without you realising they’ve not been paid. Checking your score will enable you to see if you’re in arrears with any of your providers. If you are, contact them to get up to date with your payments; this will help improve your score.
  • Protect yourself from fraud. Another great thing about being on top of your credit score is that can you spot changes in your file, including anything out of the ordinary. This may enable to you detect fraud you wouldn’t usually see and correct it before it has a major impact.

The reality is right now, we don’t know what’s around the corner but the best thing you can do for your business is be prepared. Know your business inside out – the financials and your credit health, so that you can respond quickly to the ever-changing environment. Whatever your current situation, the last thing you and your broker want to do when you’re trying to keep your business running is jumping from lender to lender trying to find one that will accept you.

Know your score so you and your broker can understand your options and save your valuable time.


Prepared by OnDeck Capital Australia Pty Ltd ABN 28 603 753 215 (“OnDeck”) for general information purposes only. Content may belong to or have originated from third parties and OnDeck takes no responsibility for the accuracy, validity, reliability or completeness of any information. Information current as at April 2020. You should not rely upon the material or information as a basis for making any business, financial or any other decisions. Loans issued in Australia are subject to the terms of a loan agreement issued by OnDeck. Loans are subject to lender approval. OnDeck® is a Registered Trademark. All rights reserved.

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