How to Maintain a Healthy Company Risk Score

Our rating algorithms are split in two for established companies using the Companies House definition of a small company for one and all medium and large companies in another. Whether large or small, follow the advice below to ensure your business retains a healthy credit score.

How to Improve Your Company's Credit Status

  • File Company Accounts Early 

As the financials age, the score decreases. To prevent a drop in score, small companies should file within 15 days of the filing date. Filing late is the biggest contributor to low credit scores. It is imperative that a company file Accounts well before the due date to ensure Companies House process and release the financial on time. Analysis has shown that small sized companies who file within the final 15 days of their due date are almost three times more likely to become insolvent than a company who files in good time. For large companies "No Rating" is provided if the accounts are filed late. Ratio Analysis - Return on assets employed etc.

  • Balance your Balance Sheet 

Financial Performance has a large impact on the credit status of a company. A decrease in turnover, profit and / or cash figures may result in a decrease in credit score.

  • Minimise Changes within Officers of the Company 

The number of directors and changes within the management of the company is also considered.

  • Keep all your Companies in Good Standing 

Director's history and performance - If a director is associated with companies which are insolvent or have adverse information this may affect the score.

  • Part of a Group of Companies? How are the others doing? 

If the company is part of a group, the companies within the group will also be analysed to look for adverse information such as insolvency.

  • Decent Demographics 

Where the company is based may have an affect on the score if the area has seen an increase in insolvencies

  • Keep on Track of your Mortgages 

The amount and number of mortgages against the company will affect the score.

  • Keep an track of your CCJ's and Debts 

Exact match CCJ's are kept on record for 6 years, whether they are satisfied or unsatisfied, unless they are settled within one month. To reduce the impact on the score, settle CCJ's within one month or as soon as possible.

  • Keep the Auditors happy 

Comments from Independent Auditors - Any adverse comments will affect the score.

Current Data Variables

  • Industry insolvency trends - Analysis across the country and carried out and adjusted quarterly
  • Number of CCJ’s - The more County Court Judgements, the bigger the affect on the score.
  • Value of CCJ’s - The bigger the value of the County Court Judgements, the bigger the affect on the score.
  • Frequency of CCJ’s (how often and how recent?) - If a company receives a number of County Court Judgements within a short space of time, this would be considered an increased risk.
  • Time critical filings - Any documents which are over due for filing at the registry would suggest an increase in risk.

Industry Insolvency Trends

To ensure that latest credit ratings take into consideration the problems that companies are facing in the current economic climate, we have taken the results through an additional stage of analysis to reflect the latest trends in insolvencies. The ratings have then been further processed to reflect the insolvency trend by industry SIC code ensuring that companies in the worst affected industries have their ratings reduced appropriately.

As a positive by-product of these changes we are able to reassess the insolvency statistics quarterly and alter the ratings both as a whole and by industry so that we continue to have the most up to date and relevant rating possible.

 

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