Does your church pay bills on time? How many creditors does your church owe? Is your church delinquent or in default on any business debt? Are there any judgments against your church? The answer to these questions can be answered easily by pulling a business credit report on your church.
Churches, like other organizations establish credit profiles when utilizing the services of vendors. For example, your church leases a copy machine from a large copy machine vendor that reports your payment history to a credit-reporting agency.
A business credit profile is a report about your organization’s credit history. Your organization gets rated on how well it meets its obligations based on information compiled from creditors, suppliers, and vendors. The profile consists of both credit accounts and service contracts. It includes historical information and can be a predictor of future behaviors.
A business credit report becomes important when churches apply for real estate loans, credit lines, and business loans. Creditors will also pull a report if a church would like to contract with them for services.
When reviewing a business credit report, a lender or a creditor can determine how likely a church will keep commitments and pay bills on time by simply reviewing its business credit report. It shows if church management is diligent or even careless with obligations.
Now biblically speaking, churches should avoid borrowing money. However, with property values being so high, many need to finance the purchase or construction of a new sanctuary.
If a church has future plans to seek financing or even to establish a business service account with a vendor, then there are some things that it could do to get ready.
1. Establish a credit profile for the church (if it does not have one) by registering with Dun and Bradstreet at www.dnb.com or Experian Business Information Group at www.SmartBusinessReports.com. This does not mean that the church has to go out and create debt. It is only recommended to establish a record of past and current vendor and supplier relationships.
2. Update your credit profile by providing information to the reporting agency about your vendor relationships (those with whom you have an excellent payment history). Include vendors currently not reporting to the agencies. For example, the church orders office supplies on a monthly basis from an office supply company that delivers. Each month the vendor bills the church for supplies that were shipped the previous month. Since, this vendor does not automatically report this information to the reporting agency, the church could provide it to the credit agency to establish a record of that relationship.
3. Pay all creditors, vendors, and suppliers on time. You do not know if your vendors are reporting information about your church to a credit agency. It is important to maintain good vendor relationships; it does not look to good if a church does not keep “its word.”
4. Contact creditors immediately to make payment arrangements if cash flow is tight and the church cannot make a regular payment. This will help the church avoid credit reporting that could have a negative impact on credit scores.
5. Monitor your credit profiles at least twice a year to ensure accuracy. Dispute any inaccurate account information with the credit agencies to keep your credit scores high and your profile in good standing.
Pull a business credit report on your church today, especially if you need to apply for a church loan in the near future. Find out how lenders and creditors will view your church from a credit perspective. Pay close attention to the rating and any comments that are posted. If everything looks good, then your church is on the right track. If things do not look good, then put together a plan to address old issues immediately. You may have to revise your budget and contact your creditors to make arrangements to catch up. Also, draft a schedule to pay bills on time, the same time every month to keep your church on track. Remember, this information will be used to judge how your church handles obligations and commitments, now and in the future.
Annena Aikins is Chief Consultant for Aikins and Associates. She supports churches via consulting to help them structure their business offices. She helps with organizational issues, HR issues, compliance, budgeting, etc. She also helps them to obtain financing for their real estate projects. Check out Annena on the web at http://www.annenaaikins.com
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