10 Remote Work Trends That Will Dominate 2019

Remote work is rising, with recent estimates stating that at least 43% of all workers now work out of the office at least part of the time. These rates are likely to increase exponentially in the coming years as digital transformation advances pose a direct threat to the traditional workplace model.  “Remote offices” or “remote workplaces” come with a unique set of challenges, including the need for increased digitization and a virtual environment that facilitates not only work, but culture and collaboration. Read about some of the top trends impacting remote work today in the Forbes article below.

Remote work is no longer a privilege. It’s become the standard operating mode for at least 50% of the U.S. population. Virtual retreats are no longer attributed solely to progressive startups. Traditional employers are finally on-board and ready to propose a flexible work arrangement higher up the pipeline.

2019 will further reinforce the current global shift towards “remote-friendly” workplaces and dictate a few more unique trends.

1. Employer expectations of digital skills are shifting from basic to advance

The demand for technology-savvy professionals now extends well beyond the software development space. According to fresh data from LinkedIn, general tech skills – web design, social media management and so on – are among the fastest growing in-demand skills. Whereas basic digital literacy – fluency with email software tools and word processing software – witnessed the fastest decline compared to other skill groups. Companies now expect employees to be more comfortable with all sorts of digital tools, even for entry-level positions and more so for remote employees. So if you are just considering the transition, make sure that your technical skill set is up-to-date and you know how to run a virtual office.

2. “In-the-office” days may become more popular

No, it’s not because more employers want to micromanage their remote teams. Quite on the contrary, employers are finally starting to address the mental health factor more seriously. The biggest reported struggle of remote work is lack of community – 21% of remote workers named “loneliness” as one of their main on-the-job issues.

To address this, companies are now encouraging remote members to come back to the office at least once per week. And this strategy gives results – Gallup poll estimated that the “visiting” employees tend to be more engaged and fulfilled when compared to their 100% remote or full-office counterparts. Such members are more likely to have friendships at work and state that their job includes opportunities to learn and grow.

3. Workplace cybersecurity will move upstream

This year, a lot of large companies have fallen prey to cybersecurity attacks and Internet giants (think Facebook) reported massive data breaches. While large corporations already have a good grip on security policies for remote employees, smaller employers have been leaving this area neglected. A new survey says that 38% of remote workers hired by SMEs do not have the technological support or expertise they need when working at home or in a public space. Interestingly enough, an additional 18% of respondents say that they would have been concerned as an employer about IT security. Rightfully so, as 72% of breaches actually occur at companies with under 100 employees.

In 2019, smaller companies should really catch up on their IT security. A good start is to develop unified security policies for both in-house and remote employees; restrict access to sensitive data to those who try to access it from public Wi-Fi networks and explore new-gen security tools, especially those powered by the blockchain technology.

4. Employers should start addressing the “trust issues”

E&Y survey revealed that less than half of global professionals trust their current employer, boss or team/colleagues. While the survey only included responses from in-house team members, the trust factor often gets more complicated for remote team members. Working solo, without regular access to company updates and the “water cooler” corporate chit-chat, can amplify the employee’s exclusion from the work process and make them question whether they are treated fairly or not.

The same survey indicated that unfair employee compensation, unequal opportunity for pay and promotion, lack of leadership, a work environment that does not promote collaboration are the key reasons for low trust. Promoting more transparency and collaboration between remote/in-house teams and management should become the new norm for 2019.

5. Having a specialization is a must

The era of generalists is over. Most employers are now after talent with specific skill sets: 78% of HR managers said that most skills will become even more niche in the next 10 years. Possessing those coveted skills means that you will remain in high-demand and have a lever during salary negotiations. Most employers are ready to pay the top dollar for hiring and retaining a remote candidate, whenever they cannot find certain expertise locally.

6. Legislature changes may lead to more remote work opportunities

FASB/IASB accounting changes are due to take effect on 1 January 2019 in the US, affecting every company that leases commercial real estate. A lot are now forced to seek alternative solutions for accommodating their offices. As a cost-optimization strategy, savvy businesses may choose to switch to telecommuting and hire new personnel on a remote basis. Gartner also estimates that “choose-your-own-work-style” decisions do not just lead to operational savings, but as well boost employee rates by more than 10%. So a lot of employers will likely diversify their work policies.

7. More training for remote staff

This year, employers have finally recognized the fact that the lack of meaningful learning and progression opportunities leads to high attrition rates. In 2019, this line of thinking also extends towards remote teams. Micro-learning and self-paced learning programs are bound to get more traction as more employers realize the incremental benefits of nurturing and re-engaging existing teams.

8. Get prepared for Gen Z competition

By 2020, Gen Z will comprise 36% of the global workforce. Being digital natives, who grew up in an internet-centric society, the members of this generation are likely to be more comfortable with newer technology and more inclined to seek remote or flexible working arrangements, rather than pursue traditional corporate roles. Account for the competition that’s coming.

9. Nomadic remote workers will find new bases

Co-working spaces became the usual habitat of the remote worker. In 2019, the travel-seeking remote employees may finally succeed in combining their need for a decent Wi-Fi with an affinity for some pool time. Selina a hotel chain, mashing up high-end suites with dormitory rooms in the same building, along with coworking spaces is expanding to the US and Europe. After successfully testing their operational model in Latin America markets, the company secured a new building in Miami and is now location-scouting in Portugal.

10. Remote work is expected to grow stronger in 2019

All signs indicate that we are nowhere close to hitting the plateau. Businesses across public and private sector increasingly recognize the benefits of hiring and retaining remote workers. Societal trends with millennials and Gen Z also push more businesses towards adopting more flexible working policies and allowing at least partial telecommute. If you are planning to transition to remote work, 2019 may be just the right time to do so.

The article above, written by Abdullahi Muhammed, was originally published on Forbes’ website. View the original article here: https://www.forbes.com/sites/abdullahimuhammed/2018/12/21/10-remote-work-trends-that-will-dominate-2019/. Abdullahi is a contributor to Forbes covering smart freelancing, the gig economy, and remote work.

To learn more about our solutions, please contact: [email protected] or 210-802-5211.

3 Tips for Startups to Achieve Financial Success

Guest post by Courteney Reed, Financial Industry Analyst at Credit Card Insider

Successfully growing a business is no small feat. It takes a great team, determination, and often a decent helping of luck. With so many things to contemplate, it is often hard to find a place to start seriously investing in your startup’s growth. Here are three suggestions:  

Separate your business and personal finances

As a business owner, you need to apply for an employer identification number (EIN) via the IRS website. This allows your business to build a credit profile and maintain a record of business transactions. Until you file your business as a separate legal entity, you could be held personally liable for all financial activities.

The sooner you establish your credit profile the sooner your business begins to build credit. Opening a business credit card and using it responsibly can help you track your expenses and profits, build your credit scores, and simplify tax filings. Conversely, mixing business and personal expenses on a personal credit card can quickly eat up your credit limit, causing a drop in credit scores and making it harder to apply for personal credit, such as car loans or mortgages.  

Consider these advantages of using a business credit card:

  • Separation of business and personal expenses
  • Higher credit limits than personal cards
  • Rewards like cash back, miles, points, and warranties
  • Potential to increase business credit scores for better business loan terms and high-tier business credit card rewards
  • Better cash flow management, allowing 20-30 days to pay business costs without interest

Finance To Fit Your Needs

Successful businesses often use outside funding to plan ahead for their business needs. Here are three tried and true options worth considering:

Small Business Loans

Small business loans provide access to capital before revenue streams begin flowing. Plus, by successfully managing a business loan, you’re increasing the potential of securing bigger business financing when it’s time to expand your company. Finding the right business loan may take time but you’ll have working capital you need to get off the ground.

Venture Capital Funding

Financing investors provide funding to startup companies that are believed to have long-term growth potential. This type of funding usually comes from wealthy investors, investment banks, and other investment companies, and ownership of a business is divided between the investors and the proprietors of the business. There are different platforms that provide a database of different investors looking to invest in new companies or promising business ideas, making it easier to find investors interested in your market niche.

Alternative Lenders

Alternative business funding is capital offered to small business owners by “non-bank” providers. Alternative lenders are particularly attractive to small business owners who don’t have an established business credit profile. 

Most lenders have their applications available online, making the approval a quick process. Their interest rates are typically higher, but if you need money in a timely manner, alternative lending might be the way to go. Typically lenders extend loan repayments from 6 months to a year, but depending on the type of loan you choose, you may not have to pay the money back until you actually draw from the provided funds.  

Leverage Software to Increase Efficiency and Reduce Costs

After getting approved for more financing, you’ll need to stay on top of all the financial details. The right software can help streamline multiple tasks and increase your team’s performance and overall efficiency. Here are three tools for keeping your finances in order:  

Effortless HR

Payroll management is often a burdensome task, especially as your business grows in manpower. Effortless HR is an HR tool that enables employees to self-manage their payroll preferences, time off, and access any other necessary information without the assistance of an HR employee.

Quickbooks for Finances

Quickbooks is simple to use and helps you keep track of all basic business transactions. Plus, they regularly roll out updates to their online platform for flexible financial management.

Dropbox

A cloud storage solution is a must-have for organizing and sharing important files. Depending on your specific needs, Dropbox contains tools that benefit secure record keeping and flexible collaboration.

Conclusion

The path to growing a successful business is not a concrete one. However, these three tips can begin to increase your financial literacy and day to day expense management in a simpler and more productive way. Seriously considering these recommendations will give your business a better chance of success and expansion in the future.

Stop. Writing. Billing. Code. Right. Now.

Doug Breaker here, CEO of EarthClassMail.com. Writing billing code is hard. Really hard. If you’re wrong by a penny, you’re all wrong.

I used to write billing code as a young developer.  I once made a mistake that cost a client $1,200,000! Oops, not my best day.

Any business not in the business of writing billing code should not write billing code. Outsource it instead.   

I guarantee it will save you time, make your other development faster, and save your sanity. Spend time building your competitive advantage, not wasting it writing billing code.

At Earth Class Mail, we use Chargify (Full disclosure: Scaleworks owns both Chargify and Earth Class Mail.  We used Chargify well before Scaleworks bought them).   

When I ran HomeFinder, we used Recurly and liked it.   Stripe’s subscription functionality offers a ton of time savings and robust tool set.  Check them all out, all offer immense developer time savings vs. developing your own billing system.  

Repeat after me ten times, “we will not have developers spend time on billing code!”

CRITICAL TIP:  before you choose, ask yourself, “will we ever want to charge for something like ‘get 20 widgets for free on our $99 plan, and 40 widgets for free on our $149 plan and charge for widgets over those amounts?'”

If you answer “yes”, then keep reading for a MASSIVE difference between Chargify/Stripe/Recurly.    This one tip can save you months of developer time, make you more money, and launch your products faster.

Let me explain with two real world examples, one using Recurly, and one using Chargify.

Example 1: Offering Free Usage on Recurly

My wife runs a little site called MovingCompanyReviews.com.   The site lets consumers read 100% verified reviews from moving companies and get free quotes from them.   For example, check out all the reviews for Tampa movers or Orlando movers.  

Consumers can even get a free pizza on their move day if they find a mover through the site. Who doesn’t love pizza on their move day?


(Quick backstory: Before I took over as CEO of Earth Class Mail, I was CEO of HomeFinder. While at HomeFinder, we launched MovingCompanyReviews.com as an internal startup. After I left, Placester bought HomeFinder about 6 months later. Placester didn’t want MovingCompanyReviews.com, so we bought it from them.)


We offer a product to moving companies called “Review Advantage“.   For that product we email prior customers of moving companies and collect reviews on behalf of the moving companies.   

We offer the first bunch of customers to write a review per month a free Starbucks coffee. The product used to be manual, but we just launched an automated version.  We set out to offer different plans with different number of free coffees:

  • $19 per month includes 3 free customer coffees
  • $99 per month includes 15 free customer coffees
  • $299 per month includes 50 free customer coffees

After we hit the free coffee limit, we wanted to charge the moving company a certain amount per coffee.   Here’s how it looks to our movers:

Here’s how we set that up on Recurly:

  1. Set up a “Measured Unit” for free coffees
  2. Set up the pricing plans, including a billable add-on for the extra coffees.  Here’s the $19 plan.
  3. Write a bunch of custom billing code to do the following:
    • Keep track of how many free coffees we’ve given in a billing period
    • Report any coffees over that the free limit to Recurly
    • Reset the counter when a customer’s billing period renews

That’s not easy code to write!   We did it, but it took our developer about three weeks of hardcore coding time to get it correct, get automated tests in place, and get fully confident that it worked.

Recurly gives us a ton of benefit, and we enjoy using it.   Unfortunately their metered component functionality still required us to write complex billing code in order to give away a different number of free coffees by plan price point.   

We made the investment because it was worth it.   However, we’d much rather spend our coding time helping consumers find great moving companies.

Example 2: Offering Free Usage on Chargify

Here at Earth Class mail, we just launched a killer new check deposit/lockbox product on Earth Class Mail called CheckStream.    

If you’re a business that gets checks, it can revolutionize the way you deposit them and record payments in Xero or QuickBooks Online.   

You can deposit any sized check into any bank in the US without going through any application process, or worrying about per check credit limits.    

Once you deposit the check, you can record payments to customers & invoices right from our app into Xero & Quickbooks online.

We launched with three pricing plans, each with a different number of checks included.   

  • $99 per month includes  30 check deposits
  • $249 per month includes 125 check deposits
  • $499 per month includes 265 check deposits

If customers pass those limits, we charge $2 per check deposit on the first two plans, and $1.90 per check on the $499 plan.

Thanks to Chargify’s new price point functionality, charging for this is a breeze.   

Check out how easy Chargify made it to set this up:

  1. Set up our 3 plans, here’s the $99 plan.
  2. Set up our metered “check deposit” component, with the three different price points.
  3. Configure each price point to include the correct number of free check deposits, see screenshot below.  
  4. When someone signs up for a plan, set the correct price point on their subscription (we do this in our ordering code, but you can do it via the user interface as well).
  5. Ship it!   That’s it!  Since our app already tracks which plan a customer is on and reports check deposits to Chargify, we didn’t have to do anything else.

Notice the step we didn’t have to do?   Write complex billing code!    Magic!    

Chargify saved us weeks or months of development & testing time.  Instead of spending weeks or months coding & testing, we launched the new plans in days.  

So do you and your company a favor, don’t write billing code!   After having hands-on experience with various billing solutions, Chargify has been the clear winner for Earth Class Mail’s needs, but I encourage you to check out all the options before committing to a provider.

Going with any will save you development time and future tears when your custom billing code breaks.    

However, make sure you bump your current and future billing scenarios against each provider to make sure you don’t get sucked back into the swampy quagmire of billing code development.

Lastly, if you’re a business that gets check in the mail, check out our new check deposit service, it’ll save you bunch of time, get money in your bank account faster, and save you from keying in payments in Xero and Quickbooks Online.

? Earth Class Mail Reinvents Check Deposit with CheckStream

We’re really excited to announce CheckStream, a new service that makes depositing checks super simple.

So many of our customers get checks in the mail, literally millions of dollars worth each month. 

In many senses it’s the most important mail you can get, and yet there was no great way to deal with them before.

Until now. Unlike traditional solutions, CheckStream is designed to work for any business – if you have a bank account, then you qualify. 

There’s no credit check, no deposit limits, and none of the typical restrictions you get with remote deposit or lockbox solutions from the banks. 

The solutions on the market today are not flexible, place a lot of burden on employees, don’t natively integrate with cloud services, and often don’t support small and medium businesses. CheckStream fixes those problems.Doug Breaker, CEO at Earth Class Mail

We set out to build something that would work across a broad spectrum of business needs, from high check volume businesses to low-volume and high-dollar transactions. Importantly, we didn’t want to stop at just the deposit, we wanted to make the entire transaction workflow better.

Native QuickBooks Online and Xero integrations make accounting reconciliation a breeze. Record transactions directly to your accounting software, so no more spreadsheets to track all the checks in your deposit.

Plus, CheckStream makes all the good things about receiving checks even better. Every deposit includes a complete content scan, so any attachments and payment coupons get retained. 

CheckStream makes depositing checks easy … We used to let checks pile up, then walk them to our bank … It saves us hours every month and gets money in our account faster. – Nick Kocinski, CFO at YCharts.com

Digital copies can be stored forever in the Earth Class Mail cloud, or sync everything to your favorite cloud storage service.

CheckStream is better because it just works

  • NO Hardware – that means no scanner in the office, and no maintenance.
  • NO Contract – month-to-month billing, just like our business mail plans.
  • NO Credit Check – that’s right, if you have a bank account then you qualify.
  • NO Deposit Limits – any amount, any time.
  • NO Transaction Fees – each plan includes a number of deposits, after that it’s just $2/check. (included deposits vary, see plans; for CheckStream add-on and individual deposit pricing, see here)

How does CheckStream compare?

You can learn more about CheckStream here, or browse dedicated check deposit plans here.

Already an Earth Class Mail customer? Contact our Support Team to learn how you can take advantage of CheckStream for your business.

The Path To More Billable Hours

Professional services businesses represent a huge chunk of the U.S. economy. Legal services alone account for nearly $250 Billion in revenues and over one million employed.

Many of these firms rely heavily on billable hours for their primary revenue stream. The story is basically the same whether it’s a law firm, CPA practice, management consultancy, or similar business. 

The problem is that so much of the day-to-day work that goes into these businesses isn’t billable. This rings especially true if it’s a solo-practice or small firm. 

It’s not uncommon to spend up to two-thirds of your time in a solo-practice working on non-billable tasks such as billing, accounting, and marketing to new clients.

Obviously, all those things are valuable. However, it’s important to understand where your time is best spent. 

For example, a typical attorney may bill in the $200-400/hr range. Is that half-hour they spend each day sorting through mail worth the hundreds lost in billable hours each week?

There is a path to reduce the non-billable work…

Download the white paper, Four Steps to Cut Back on Your Admin Costs & Increase Billable Hours

Five IRS Tax Tips for Expats with Small Businesses

This is a guest article by Hugo Lesser @ Bright!Tax

A lot of entrepreneurs choose to run their small business from abroad. For some it’s a way to get around work visa requirements, for others it may be a tax savings decision, and many are simply drawn to the expat lifestyle. 

Unfortunately for you, the IRS still needs to get theirs. If you’re a U.S. citizen, you need file a federal tax return each year.

There are a few critical steps you can take to minimize your tax liability, and several important considerations that are unique to expat tax returns.

Use your expat status to reduce tax liability

You’re not going to escape the IRS, but to their credit they are accommodating toward expats. 

There are some key exclusions that allow you to partially reduce or entirely eliminate your U.S. tax liability.

The most common is the Foreign Earned Income Exclusion (FEIE), form #2555.

The FEIE allows expats, who can prove that they’re living abroad, to exclude the first $100,000 (inflation adjusted) in earnings each year. 

The threshold for expat living abroad is as follows, per the IRS website:

“You are considered to live abroad if you are a U.S. citizen whose tax home is in a foreign country and you have been present in a foreign country or countries for at least 330 days out of a consecutive 12-month period.”

If you’re in a foreign country with a higher income tax rate than the U.S., then consider the Foreign Tax Credit (FTC) form #1116.

With the FTC you can claim a dollar for dollar tax credit for any income taxes you’ve already paid abroad, and potentially eliminate your entire IRS tax bill.

Bonus: The FTC credits rollover for future use.

Deadlines still apply so you have until June 15th to file, with a further extension available until October 15th upon special request.

Single-member LLC’s are your wallet’s best friend

Limited liability corporations registered in the U.S. with a single owner are considered ‘disregarded entities’ by the IRS.

Huh? Well, that means they don’t require separate corporate reporting, and any revenue or expenses can be included on the owner’s personal tax return.

There’s a catch though, you need to “elect” to be considered a disregarded entity by filing a special form, form #8832 (#8858 in subsequent years).

Doing that allows you to use the personal exclusions mentioned above against your corporate profits.

The IRS knows your bank account balance

You’re required to report any foreign bank or investment accounts if the total value of their combined balances is over $10,000. 

Any bank account that you have control or signatory authority over qualifies, including small business accounts, even if the account isn’t in the your name.

For example: if you have a personal savings account and control over your small business account, and the two balances combined had a value of over $10,000 at any time during the tax year, you will need to file a Foreign Bank Account Report (FBAR).

Foreign banks report their U.S. clients’ account details to the U.S. government, so the IRS knows who should be filing. Penalties for not filing are substantial. 

If you ignore this requirement, you will get penalized. From the IRS website,

“For willful violations, the inflation-adjusted penalty may be the greater of $124,588 or 50 percent of the balance in the account at the time of the violation, for each violation“.

If business is good, the IRS wants to know

The Foreign Account Tax Compliance Act (FATCA) requires expats to report their foreign assets (not including tangible assets such as property) if they are worth a total of at least $200,000 at any time during the tax year.

Qualifying assets include savings and investments, and small businesses.

If your investments and the value of your small business pass this threshold, you should report them.

You’re still going to pay for Social Security

Sole proprietorships and single owner LLCs registered in the U.S. are required to pay Social Security taxes.

If your business is registered abroad on the other hand, you aren’t.

Certain countries have Totalization agreements with the U.S. A totalization agreement means that you won’t be penalized with a requirement to contribute to two separate social security programs.

There are dozens of countries that qualify including, but not limited to: Australia, Canada, Denmark, France, Germany, Ireland, Japan, Norway, Poland, South Korea, and the United Kingdom. 

You can view a complete list of Totalization Agreements here.

In countries with Totalization, you can opt to have your foreign social security taxes credited toward your U.S. future social security benefits.

Wrapping up…

Filing U.S. taxes as an expat small business owner can be complex, and this article is not comprehensive.

The IRS offers an overview of the rules and required forms, just remember that mistakes can be costly.

As with anything tax related, consult a licensed professional for your specific needs.

A More Typical Startup Story…

It’s easy to become infatuated with Startup Culture. Attention grabbing headlines, founders dating Victoria’s Secret models, fast cars, and giant houses.

If it all sounds a bit cliche, well…it is. It’s a story as old as the idea of free enterprise itself except that today entrepreneurs can do it without building a skyscraper, laying down a transcontinental railway, or putting a million cars on the road.

Heck, Slack went from $0 to $1,000,000,000 in 8 months – with a messaging app! Anyone remember AIM?

The reality of a small business journey for 99.999% of the entrepreneur population is very, very different. It’s a lot more like our story, 10 years in the making and still going – still growing.

Read the complete article here, from our friends at Chargify.

SQL for Slack – A New Tool From Our Lab

We’re a Slack company, actually that might be an understatement. Slack is very much a part of our corporate culture, and we use it for…everything.

One of the biggest benefits we’ve experienced as a company is in our ability to improve data transparency, eliminating many of the information silos that form over time.

Anyone in our Slack organization can summon near real-time data on everything from lead volume, to operations performance, to active users on each of our addresses, and much more.

A lot of the data we pipe in directly via Slack apps and Zapier integrations, much of it even streams live.

Still, we had a ton of data locked away in SQL databases. Accessible, but obviously not as democratic or immediately actionable as live streaming data into Slack.

Like so many new products are born, we built something to help solve our own business problem and now we want to share it with you.

SQLBOT.co – SQL reports in Slack, no coding required. 

If you have awesome data tucked away in virtually any popular SQL database, this is the tool that will let you unlock it and make it actionable for everyone in your organization.

All you need to do is…

Write some SQL

Write SQL so you can send to Slack

Connect to Slack

Get SQL Reports in Slack

SQL reports in Slack from SQLBOT

SQLBOT has been designed to work with any popular SQL database (PostgreSQL, MySQL, and Microsoft SQL Server), and requires no coding experience to get started.

Take it for a spin and let us know what you think, first 30 days are free.

P.S. Developers interested in contributing to the project? Email Us

Small Business Credit Building – Part 2

In Part 1, we reviewed the table stakes for getting past that first underwriting stage in the SMB loan qualification process. You’ll need to go through those steps at a bare minimum just to comply with automated qualification requirements.

This edition is all about establishing a business credit history in preparation for a loan.

It’s a lot like building personal credit history – there are credit reporting bureaus, payment history, credit utilization, and account age factors to consider.

A few key differences:

  • Unlike personal credit scores, which range from 300-850, business credit scores usually range from 0-100 (Equifax is different). 80+ is considered “very strong”.
  • Experian, the largest business reporting bureau, will open a report for your business based on public records data. As soon as you complete your corporate formation and get any vendors reporting, they will open a file on you.
  • Certain ratings agencies, like Creditsafe, will provide credit limit recommendations – that is, advising on how much credit your business should have outstanding at any time.

Let’s jump right in…

Establish A Business Credit Profile

There are actually several credit reporting bureaus that you will need to actively manage, and it’s all part of building up the right business credit profile.

It’s not unlike personal credit building, except that business credit is much more precise in its tracking. For example, personal credit reporting is based on 30 day increments.

So if you pay your personal credit card bill 29 days after it’s due, you’re on time. If you pay 10 days before it’s due, you don’t win anything.

With business credit, reporting is done to the day. Paying early actually has a marked advantage, and paying late by even a day will hurt you.

Experian Smart Business credit file

Experian is the biggest and easiest to get started with. Their reporting guidelines for vendors are the most open, so you can build up a history quickly.

Setting up your Experian Smart Business Report is free. They are used by a wide variety of lenders to make decisions.

The majority of commercial banks, leasing companies, business credit cards, and many trade vendors report activity and trade lines to Experian. 

If you can’t find a file for your business yet, one will be available within 30 days of the first payment reported.

There’s a very detailed FAQ on the Experian Smart Business Report here.

Creditsafe business credit file 

Creditsafe is the largest global business credit agency, but new to the U.S. scene.

Regardless, over 10,000 creditors and lenders already rely on them for evaluating business loan qualification. There’s a very strong chance your lender will look at this report as well.

Unlike other bureaus, Creditsafe also provides credit limit recommendations to lenders. That is they recommend the total amount of outstanding credit that your business should have at anytime. 

Dun & Bradstreet DUNS number and open file

D&B tends to be considered the go-to source for Net-Terms credit reporting data. Which is great if you have access to trade lines with vendors.

D&B won’t issue a DUNS# or D&B rating until you interact with them directly. You’ll need to first request a DUNS#, the free path takes 15-30 days for them to setup.

You can also sign up for their credit builder product to expedite everything, and get access to your PAYDEX score as an added bonus.

You’ll have another score to monitor here. Unlike the other credit bureaus, D&B uses a PAYDEX score to provide instant creditworthiness feedback to lenders.

A PAYDEX score of 75 is considered, by many, the minimum to be qualified for the best business financing opportunities.

If you just pay all of your business trade and credit lines on-time, that is within the terms established for each line, you will get a score of 80.

PAYDEX rewards you for paying early, averaging payments 30 days earlier than required is the only way to reach a perfect 100. It’s also worth noting that each credit line is weighted, so frequent big payments will carry more weight than infrequent small payments. 

Equifax Small Business credit file 

Most U.S. banks and business credit cards underwritten by banks report to Equifax. Equifax is typically slower to open a file on your business than other bureaus.

Like the other bureaus, your Equifax Small Business Credit Risk Score is determined heavily by timely payments. Equifax is not very open about all of the factors that go into the score though, so it is a bit of a black box.

The score itself is on a scale of 101-816, with higher equal to less credit risk.

The Equifax report also provides lenders with a Business Failure Risk Score. On a scale of 1000-1880, with higher scores equal to lower risk. This score is paired with a “class”, 1-5 with 5 being most risky, and a percentile.


Money in the bank

Your business banking history is tracked, scored, and relevant to your creditworthiness. It’s commonly called a “bank rating” and you’re graded on a graduated scale.

The bank rating scale is based on the average balance in your account for the last three months, and it takes into consideration any adverse history such as bounced checks.

Lenders want to see that you have enough cash on hand to service debt, that you’re using it responsibly, and that you’re keeping a cushion.

A “low 5” rating is usually what lenders want to see when you’re applying for a loan. To be in that range, you need at least $10,000 in the bank on average for three months and no adverse activity on the account.

This tends to be a non-negotiable condition for lenders.


A line of credit from a vendor

Well, you actually should aim for at least 5. That seems to be the magic number to establish your business and ease lenders’ concerns.

A line of credit from a vendor is basically the ability to pay a vendor on Net terms, usually 15, 30, 60, or 90 days. That means, you get something from the vendor and the net balance is due X many days after you receive the vendors service or product.

It’s actually pretty easy to set these up for common business purposes. Frankly, you might have some already and not even know it. Many business supply companies, like Grainger, will extend small trade lines of up to $1000 to any real business with an EIN and a DUNS#.

The key factor to remember here is that these are only impactful if use the trade line consistently, monthly, and pay it down in full each month…on-time.

Business credit cards

Revolving credit accounts are a powerful tool to build your business credit rating, just like they are with personal credit. 

Once you have your credit files open and vendor trade lines reporting, you can begin applying for business credit cards.

The business credit cards you want are just those that report to your business credit profile, and are in no way linked to your personal credit file. 

Not all business credit cards will report to just your business credit profile, so be selective. Some may require a personal guarantee, which is OK to provide in the beginning. 

A business loan from a bank

You might be asking yourself, “do I need a loan to get a loan?”. The answer is no, you don’t.

BUT, if you want to expedite building your business credit history AND increase the odds of securing a more substantial loan amount with better terms, then this is important.

It’s not a catch-22, you can get a low-value business loan pretty easily when it’s secured. That means you place a deposit with the bank in an interest bearing account like a Certificate of Deposit, in turn the bank will give you a loan for the exact value of the deposit.

You pay it off, then you close the CD and recover your payments. The net cost to you is just the difference in interest rates between what you earn on the CD and what you pay on the loan. Secured loans tend to carry low interest rates as well.

To take full advantage the loan has to be in your business name and using your business EIN, with payments coming from your business bank account. Early payments help expedite your credit building as well.

If you think this feels like cheating, it’s not. Secured business loans are common, here’s an offer page at Bank of America.

There are lots of legitimate reasons for a secured loan, and building your business credit is one of them.

Wrapping It All Up

Taking the above steps will get you on track to secure a more substantial business loan within as little as 1 year. In the next article, we’ll discuss a Small Business Administration specific requirement, the SBA business plan.