My advise to any business is to hire and retain competent A/P & A/R staff. They are worth more than gold to a successful business. A well-staffed accounts payable department will keep your payables current, giving you a good credit score and a reputation for satisfactory payment history. This is important when applying for credit terms with your vendors and can qualify you for lower interest rates on bank loans. They are also your first line of defense against invoicing scams by verifying each invoice before approving for payment. A well-staffed accounts receivable department will keep invoicing cycles low, which in turn, gives you the cash flow to use to keep your A/P current. Keeping your accounts receivables current, eliminates bad debt and the need for third party collections agencies, which can cost up to 30% of what they collect. The right A/P & A/R staff is essential for a successful business. These professionals take care of the day to day cash flow so the business owner can concentrate on other aspects of the business. In the business world, reputation is everything and keeping a good reputation through satisfactory payment history is important to your success.
Drawing from my banking background at Sparda and my experience at N26, I often tell our spectup clients that maintaining a cash runway is more crucial than relying on credit. One situation really stands out - I worked with a promising SaaS startup that was tempted to max out their credit lines for aggressive marketing expansion. Instead, I advised them to focus on optimizing their current customer acquisition costs first, something I learned during my time managing business development at Civey. We helped them identify areas where they could reduce spending without compromising growth, which actually saved them from the cash flow problems that sink 38% of startups. The key was creating a balanced approach: use credit strategically for specific growth initiatives, but always maintain enough cash reserves for at least 6-8 months of operations. This advice has become even more relevant since I notice many startups get caught up in the excitement of growth and overlook the fundamentals of financial health. At spectup, we've made this a core part of our advisory process, helping founders understand that smart credit utilization is about timing and purpose, not just availability.
My name is Diogo and I am the founder of the website What Neobank which is dedicated to neobanks and digital wallets (more than 450+ brands featured worldwide - What Neobank - Find the right Neobank for your needs! ). One piece of advice I've shared with clients about credit utilization, which has proven invaluable, is keeping credit card utilization below 30% of the credit limit. This simple yet powerful advice has helped many avoid the common pitfall of accumulating unmanageable debt. High credit utilization can significantly impact your credit score, making it harder to qualify for loans or receive favorable interest rates. I always stress that even if they can afford to carry higher balances, it's better to keep their usage low, as it reflects positively on their financial health. When building What Neobank, I had to think about how to incorporate responsible credit usage into our platform. I wanted to ensure that our customers, especially those new to financial management, had easy access to tools that would help them understand their credit utilization in real-time. We integrated real-time credit score tracking and utilization alerts, so users can instantly see how their credit card usage affects their financial standing. For instance, a client who was struggling with credit card debt came to us looking for advice. They were using 80% of their credit limit each month, which was negatively impacting their score. After implementing a strategy where they paid down their balance to below 30% and used our platform's budgeting tools, they saw significant improvements in their credit score and financial stability. The key takeaway for clients and anyone in similar situations is being mindful of how much credit you're using, and setting up tools to track it proactively. At What Neobank, we aim to simplify the management of credit by offering automated reminders and educational content on responsible usage, helping clients make better financial decisions before they fall into debt traps. Best Regards, Diogo Silva Expert in neobanks/fintech www.linkedin.com/in/whatneobank https://x.com/whatneobank https://whatneobank.com/
One tip I've given regarding credit utilisation is to keep your credit usage below 30% of your total credit limit in order to maintain a healthy credit score and prevent overextending financially. I told a client that continuously using more than this percentage could indicate financial strain to lenders, which could result in higher interest rates or future loan difficulties. By making a budget and keeping a careful eye on their spending, they were able to pay down balances and only use credit for planned, manageable purchases, which not only helped them avoid financial pitfalls but also gradually improved their creditworthiness, which opened doors to better financial opportunities.
I think one piece of advice that's really stuck with clients about credit utilization is keeping their utilization below 30%, but aiming for 10% or lower when possible. I always emphasize that credit utilization isn't just about staying under a limit-it's about demonstrating financial discipline and stability. For example, I once worked with someone whose credit score was stagnating despite paying on time. I suggested they monitor their usage weekly and pay off balances multiple times a month, even before the statement closed. This kept their utilization consistently low when reported to credit bureaus. I think this approach helped them not only boost their score but also made them more mindful of spending habits. So, I'd say staying proactive and understanding how utilization impacts your score is key to avoiding financial pitfalls while building strong credit over time.