3 Tips to Maintain Your Small Business’s Credit Score During and After the COVID-19 Pandemic

The COVID-19 pandemic may impact your small business credit score once the PPP program ends. A good credit score qualifies you for a better interest rate. The less money spent on interest, the faster debt is paid off. You will have more money to pay for your business’s expenses. Maintain your business’s credit score with these 3 tips. credit card for tips to maintain your small business' credit score

Take Inventory of Debt, Expenses, and Current Cash

Before you think about your credit score, determine what your debt and expenses are. From there, calculate your incoming cash flow if you do not have those numbers already. Keep tabs on these amounts every single month. Check your credit report for errors. Mistakes or errors could bring your credit score down. Many companies will give you a report for free. 

Cut Costs

After making a list of what your expenses are, you can see where your money is going every month. Decide if these costs are worth paying for. An easy way to go through your list is to ask yourself if each cost provides value to you or your customers. 

One way to cut costs is to reduce traditional marketing and increase your activity on social media. Customers and clients are more likely to support your small business if they recognize and feel a connection to it. They are less likely to choose you because of traditional advertising. That is why networking and interacting on your business’s social media platforms is important. 

Another way to cut costs is by narrowing your focus. Limit what you offer instead of offering everything in terms of products or services. By doing this, you will produce higher quality work. 

Last, minimize your outsourcing costs by utilizing your current employees. Give responsibility to in-house employees that possess skills and efficiencies in those areas. 

Continue Making Payments

Some essential, online, or delivery businesses continued operating during lockdowns without losing their regular income. These businesses should continue making payments on time like normal. If they cannot make a full payment, a partial payment is better than not paying at all. Interest payments make up 35% of your credit score, so it is important to pay attention to making payments on time when possible.

Many other businesses have lost money because they were shut down or lacked consumer spending because of the unknown. If your business cannot afford to make a payment on time, talk with lenders and insurance companies. Speak with these companies as soon as possible because many of them are helping by making payment plans or deferring payments. 

PL Consulting Is Here For Your Business

PL Consulting offers a diverse range of bookkeeping and other financial services. We customize our services to each of our clients and their business plans. We consider one-on-one interactions a valuable resource for both your team and ours. 

Our team can help you with budgeting, which directly impacts credit scores. If you would like to set up an appointment for our services, call us at 410.764.3731 or book an appointment through https://calendly.com/michaelplc

How COVID-19 Has Changed the Future of Money

COVID-19 has spread across the world and closed down businesses everywhere. There have been changes to the world in ways that we never could have imagined. It will have a major impact on the way businesses and individuals handle money.

credit card changes the future of money due to covid-19

Consumer Spending

Spending is low in most industries because of lockdowns and limited locations being open. Some particularly low industries are travel and transportation, apparel, and services. Consumers are expecting lower household incomes for the upcoming months, so money spending is focused on necessities. The uncertainty causes irregular buying behaviors. These behaviors have businesses scaling back on production. 

Industries that have been thriving include grocery stores, house supplies, and at-home entertainment. This is caused by the increased amount of time people are spending indoors. Consumer spending drives economic growth. Although it is positive that these industries are still doing business, it is vital to the economy that other industries pick back up again. 

It is unknown if buying behaviors will go back to normal or not. Gyms may not completely recover because of the increase in at-home workout equipment and virtual fitness subscriptions. Restaurants have lost tons of money from canceled trips and lack of orders. Without a steady income, many of these businesses have had to permanently close their doors. 

Retirement Plans

The CARES Act made three changes to certain retirement accounts. These changes have increased the number of early withdrawals to people’s retirement plans.

  1. It doubled the amount a person can take out as a 401(k) loan. 
  2. It allowed people to take early hardship withdrawals of up to $100,000 from 401(k)s and IRAs in 2020 without paying a 10% penalty before the owner turns 59 1/2.
  3. It allowed retirees and those who have inherited IRAs to skip taking a required minimum distribution (RMD).

This may cause people to feel more comfortable taking out extra money when the CARES Act is not in place. There are rules and restrictions on that you can find here. 

Cash Payments

Many stores started to only take plastic cards and virtual payments like Apple and Samsung Pay. This is one way to reduce the spread of germs. There might be a shift in some of these places to only accept these payments over cash permanently. Some people have opted out on using cash on their own for the same reasons- to flatten the curve.

Other businesses have completely reduced contact with payments. Their solution to this is mobile payment applications. Venmo and Cash App are two increasingly popular examples of this. These apps are easy to download. After the pandemic, people will be more likely to use this form of payment after they feel more comfortable and trust that it works. 

Future of Money

Businesses need to adapt to the changing world. Changes in spending habits, retirement plans, and cash payments are some ways COVID-19 has affected money. We can help you navigate the future of your business’s money. Serving the Baltimore area for several years, we are dedicated to providing customized services to fit each one of our client’s unique needs. 

Please contact us at (410)-764-3731 or at https://www.plcfo.com/contact/ for questions or to book an appointment.