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The 5 Easiest Ways to Build Business Credit

Women on Business

However, if your company can build business credit, you will find yourself gaining more opportunities to access cash. Whatever you do, don’t operate your business on your personal credit. Not only does it make your personal finances vulnerable, but business credit is a much more powerful tool professionally than personal credit. Make the financially fit decision Use these 5 quick tips to start building business credit today.

Subprime Credit-Card Holders Are the Most Profitable

Harvard Business Review

Although credit-card holders with low credit ratings default more often than the rest of the population, the interest and fees they pay make them far more profitable for banks than any other groups of credit-card customers, according to research reported in The New York Times. Even during the financial crisis, when banks were hemorrhaging money on subprime mortgages, subprime credit cards were a major source of profits.

When is Spinning the Message a Good Thing?

Marshall Goldsmith

This dysfunctional spinning led to countless disasters for buyers - who lost their homes and ruined their credit ratings. Q: In our company we value integrity, yet leaders - especially in marketing - are taught to "spin" to make products and services sound good to clients. When is "spinning" a message a good thing? When it is wrong? A: Every company that sells products or services "spins" these in a positive way to clients. This is not immoral, illegal, or unethical.

Use Big Data to Create Value for Customers, Not Just Target Them

Harvard Business Review

Multi-billion dollar businesses such as Yelp, Zagat, TripAdvisor, Uber, eBay, Netflix, and Amazon crunch quantities of data including ratings of service providers and sellers in order to reduce customers’ risk. Big data holds out big promises for marketing.

The Impact of the Blockchain Goes Beyond Financial Services

Harvard Business Review

Blockchain technology can also take networked business models to a new level by supporting a whole host of breakthrough applications: native payment systems that run without banks, credit card companies, and other intermediaries will cut cost and time from transactions.

The Real Challenge to Turkey’s Economy Isn’t Terrorism

Harvard Business Review

Turkey’s general credit rating is still higher than that of Brazil, Croatia, Portugal, Cyprus, and Serbia. The domestic saving rate , stagnant productivity , unemployment , and rapidly increasing labor costs all adversely affect growth.

Does Standard & Poor's Deserve a Downgrade?

Harvard Business Review

nation's credit rating has the same tone. Ratings are great when there is misinformation or uncertain information, but that is not the case here. An "AA+" rating is defined by S&P as follows: "An obligation rated 'AA' differs from the highest-rated obligations only to a small degree. And all ratings agencies tell their constituents that their ratings are a guide, a compass, not a hard and fast rule.

StrategyDriven Editorial Perspective – Negotiations and the Divided Government

Strategy Driven

The second objective of all three parties was the avoidance of a credit rating downgrade. At the time (prior to the actual downgrade), the threat of a credit downgrade forced all three parties to the negotiating table.

How Share-Price Fixation Killed Enron

Harvard Business Review

It appears that Enron''s final fatal mistake was to try to support its stock price instead of living up to key contractual obligations required to maintain its credit rating. What caused Enron''s bankruptcy was, quite simply, the loss of its investment-grade credit rating. So, what caused Enron to lose its investment grade rating? Were the rating agencies aware of Enron''s oft-maligned financing structures?

Private Equity Can Make Firms More Innovative

Harvard Business Review

There’s a longstanding debate about whether private equity investors create value for the firms they buy.

LBO 5

Incremental Fixes Won’t Save the U.S. Health Care System

Harvard Business Review

But the push to transform their businesses occurred at exactly the same time the government was cutting reimbursement rates, putting significant pressure on hospital financials. That means more aggressively reducing fee-for-service reimbursement rates relative to value-based payments. We need the equivalent of Consumer Reports for health care or Morningstar ratings for clinical services. Tom Price, President-elect’s Trump pick to be the next U.S.

What Economists Know That Managers Don’t (and Vice Versa)

Harvard Business Review

To begin with, quite a few parts of it are heavily concentrated at a global level (the credit ratings business, for example, or global investment banking), and many more at the national level (just six financial institutions account for 46% of all U.S. Why did Jean Tirole win the Nobel Prize in Economics?

Three Questions to Ask Your Advanced-Analytics Team

Harvard Business Review

The idea is that direct driving behavior over time will be more predictive than traditional proxies such as age, credit rating, or geography. For insurers, transforming these data into their most usable form may require the creation of new composite variables or scores from the existing data — something like a driving risk score that gives weight to telematics data, geography, and credit score.

The Real Solution Is Growth

Harvard Business Review

Recent headlines have focused on the debt ceiling , the recent credit rating downgrade , unemployment , and the other thorny fiscal challenges facing the United States. But consider this: increasing the country's average growth rate by one percentage point over the next 20 years would not only result in much higher incomes and more jobs for all Americans but would also obviate the need for drastic spending cuts today to reign in the government deficit.

Conversations I Can Do Without

Bird's Eye View

And as for the news that my credit rating has changed and I should check it out, I'm not interested in learning more about that. I have so many people interested in talking with me via email. You, too? . Not sure which is most annoying.

Crisis of Faith in the Financial System

Harvard Business Review

This pattern of abstracting further and further away from "real" things and "real" value has continued to the present day, giving us credit cards and collateralized debt obligations (not to mention casino chips). From Bernie Madoff to derivatives to the housing bubble to dubious AAA credit ratings, we continue to find new ways to encourage people to make financial leaps of faith. What happens when there is a mass loss of confidence in the financial system?

What Economists Know That Managers Don’t (and Vice Versa)

Harvard Business Review

To begin with, quite a few parts of it are heavily concentrated at a global level (the credit ratings business, for example, or global investment banking), and many more at the national level (just six financial institutions account for 46% of all U.S. Why did Jean Tirole win the Nobel Prize in Economics?

How Credit-Worthy Is America, Inc.?

Harvard Business Review

In financial terms, and especially with regards to credit, governments are no different. As the CEO of a credit business, I’m in a unique position to take a look at how the US actually stacks up. Several agencies rank government creditworthiness, and according to all of them, the US is pretty darn good: Moody’s rates us at the top of the scale with an AAA rating. If the government were a business, how would its credit rating look?

GDP 0

Ratings Agencies Are the Darnedest Things

Harvard Business Review

They gave AAA ratings to financial instruments that were essentially fraudulent to begin with and effectively worthless at the end. The fault here, though, lies as much in ourselves as in our ratings agencies. And S&P's ratings downgrade of the U.S., I should disclose here that John Chambers, the chairman of S&P's sovereign ratings committee, is a social acquaintance. Lots of overseas regulators and private investors have come to rely on the ratings as well.

Why Rational People Can’t Succeed as Economic Forecasters

Harvard Business Review

We’re all used to economic forecasts. We’re also used to them being wrong. But there was a time when forecasts were new and exciting, and people were genuinely surprised when they didn’t pan out. This was during the first decades of the previous century, an era that Harvard Business School historian Walter Friedman chronicles in his new book Fortune Tellers: The Story of America’s First Economic Forecasters.

AskObama Is a Meaningless Marketing Stunt

Harvard Business Review

The dismal truth is that pretty much all of yesterday's institutions — from banks, to "the corporation," to credit ratings, to schools — are just as broken as our political institutions are. I'm a citizen of a generation whose future is going up in smoke faster than you can say "credit default swaps." So, what are you asking President Obama? Why not more stimulus? Why did he choose to bail out the banks?

Government Regulation That Actually Works

Harvard Business Review

Workplace inspections not only improve safety, they cause no discernible damage to employers' ability to stay in business and no reductions in sales or credit ratings, according to our research. The federal Occupational Safety and Health Administration (OSHA) is back in the news after the Government Accountability Office criticized the agency for taking too long to adopt new safety regulations. The GAO report says the delays compromise worker safety.

Why We Build Fiscal Cliffs

Harvard Business Review

The interest rate on 10-year Treasuries is a mere 1.58%, the lowest in more than 50 years. The rate on the inflation-linked 10-year is negative 0.8% credit rating but no observable increase in interest rates. Why is there a fiscal cliff? Because Washington built it.

A Lesson from Warren Buffet about Ethical Blind Spots

Harvard Business Review

It also accounts in part for the failure of security rating agencies to accurately gauge the riskiness of the instruments they rate. And, when we allow financial firms to choose for themselves the agencies that rates their financial products, the agencies have every incentive to be lax. The data seem clear on David Sokol's conflict of interest in the Berkshire/Lubrizol deal. He bought shares in Lubrizol, and then encouraged Berkshire to buy the company.

Four Steps to Fixing Your Bad Data

Harvard Business Review

As one might expect, officials are using the error and S&P's earlier failure to properly rate bundled mortgage products to argue that the downgrade is incorrect. From falsified mortgage applications and bundles of toxic mortgages, to incorrect credit ratings and balance sheets that couldn't be trusted, the financial crisis is as much about bad data as it is about unfettered greed. At this point, most everyone has heard that S&P downgraded U.S. government debt on Friday.

Who Fixes the Euro?

Harvard Business Review

But remove the currency markets and you take away the constant credit rating service the currency markets provided. To replace all that the banks ought to have undertaken keener credit analyses, probably resulting in higher margins on loans to the peripheral countries. It was the same problem with credit analysis. It probably will be (and I expect should be), perhaps through the use of the credit default swaps market.