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How important is credit?
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February 17, 2000: 11:04 a.m. ET
To a small business owner whose cash flow is unsteady, consider credit
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NEW YORK (CNNfn) - Dear Jane: I started a janitorial company a couple years ago. I'm having cash flow problems because my clients don't pay on time. Should I obtain a line of credit to cover expenses and then pay it off each month?
Keeping the cash flowing is a major challenge for all small businesses. When your clients don't pay on time, having access to a commercial credit line is a great way to keep on top of your bills. A line of credit allows you to pay your debts without falling behind. Try to pay it off monthly to avoid incurring late fees or interest charges.
It's best to apply for a modest credit line, maybe $5,000 at first. Once you pay it off in full several months in a row, you can ask your banker for an increase.
Right now, big and small banks are aggressively pursuing small business owners -- offering us all kinds of services and discounted fees. If you aren't happy with the way your bank treats you, spend some time meeting with competitors. Bankers appreciate and reward loyalty, so plan to move both your personal and business accounts to one bank. Consolidating your accounts also helps you qualify for a variety of free services and perks including safe deposit boxes and free traveler's checks.
While you are updating your banking services, check out all the new online banking options. Banking online can save you time, money and gasoline.
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ApplegateWay
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