How to Protect Your Business and Credit Score During a Global Crisis
It is no longer news, how the Covid-19 pandemic is ravaging the world, destroying lives and businesses. The devastation is so great that many experts in the science, business and finance, and the government, have predicted that it might take several years to recover.
As a business owner, you most likely have felt the impact as soon as governments around the globe began to enforce the lockdown to prevent the spread of the virus. And not only did the lockdown confine people in their homes businesses also had to shut down, which means little to no cash flow. Even as of today with the slight relaxation of the lockdown, businesses are still faced with the challenge of meeting their financial obligations including bills and payroll. This is indeed a stressful time to be a business owner. There is a lot of anxiety relating to the loss of business, unemployment, financial sustainability and debt.
Not only your businesses will take the hit, your business and personal credit scores will be affected as well, especially if you cannot meet up with payment due to a lack of cash flow.
If you are worried that your business and personal finances may be affected by the current pandemic, follow this guide to protect yourself from the impact.
Monitor your bank accounts for suspicious activities
Global crisis such as the Covid-19 pandemic always presents an opportunity for fraudsters to strike. If you follow the news closely, you may have come across a few stories related to financial crimes such as scams and all kinds of fraud during this time.
Several security reports have highlighted common scams that people are likely to fall during a crisis such as mail scam, fraudulent website links, malicious file attachments, and a variety of others designed to trick unsuspecting victims to give up their personal data. On many occasions, these scams use fraudulent financial aid websites or charities. Ensure that you scrutinise any suspecting emails, social media posts with links, phone calls, or text messages.
If you must apply for government financial aid or any type of charity, go directly to the official government website to get accurate details about such loan facilities. Apply the same scrutiny to any charity organisation you want to help.
Review your bills
Since you are probably struggling with your cash flow, chances are that you will have issues paying all your bills. The first thing to do is to outline your bills, and then develop a plan for paying them. Now, you may want to prioritise since you may not be able to pay them all at once. Review your bills and eliminate the ones that aren’t important to reduce cost. Then channel the money you have into important expenses like rent or mortgage, leases, credit card debts, vehicle loans and utilities.
There are apps with automated features that can help you make the process easier. Many of these apps have features that can help you monitor your money, as well as integrate with your credit cards, loan lenders and more. With these apps, you will be able to monitor all transactions and account for your spending. But most importantly, you will be able to identify bills or spending that can be cut down.
Use a credit security service
In times of crisis, you need to increase the level of security, especially when it concerns your money and identity. A service that monitors your credit and identity is your best bet against fraudulent activities that can put a dent to your credit score. This is one of your best lines of safety in the digital age when we are more prone to internet fraud.
Some services will help you monitor your credit and alert you when there is a data breach. Also, they will prevent third party access to your data, therefore reducing your exposure to identity theft.
Contact your creditors if you are struggling with repayment
During a crisis, there isn’t much that you can do as far as making money is concerned, except your run an essential business that people need even while in isolation or during the lockdown. If you find out that you will not be able to make the next instalment of your loan repayment, contact your creditors before it is due. Do not wait till you have defaulted as you may damage your credit score.
Contacting your creditors and letting them know your current circumstances may allow keeping your credit score intact. The crisis is already god enough an excuse as everyone is taking a hit, and your creditors already know, but reaching out to them is the right thing to do. Many creditors are most likely willing to look for ways to work out a plan for repayment for most debtors.
If there is the option for a deferment-payment plan, take advantage of it. However, ensure that you have a clear understanding of the terms and conditions before doing so. Knowing what you are committing to is important, and this involves the term duration, whether there is a balloon payment in a specific time frame or the payments in that period will be deferred to the end of your credit/loan term.
Reduce your spending to conserve cash flow
The last thing you want to do during a crisis is increasing your spending. Most people will fall for this as they now have more time to browse the internet and stumble on things to buy however unnecessary they might be. Even if the government decides to give a relief package that includes a cheque, or subsidies on electricity bills that release some funds to your pocket, resist the urge to spend more.
There is no better time to be conservative with your spending than a time of crisis, because no one knows how soon it will end, and you must meet your loan obligations to maintain a good credit score.