Login Login

Tel: 0207 636 2430

Credit Scoring

Advancing credit to a customer can be a risky business. Most new customers will be asked to pay pro forma for the first purchase or for purchases over a minimum period of time. Many companies will open a credit account for a new customer on the strength of two business references. Very few companies review the creditworthiness of customers with whom they have done business with over a longer period of time. Long term business relationships are no guarantee in themselves that customers can continue to pay!

There were 4,233 compulsory liquidations and creditors’ voluntary liquidations in total in England and Wales in the second quarter of 2011 (on a seasonally adjusted basis).  This was an increase of 2.7% on the previous quarter and an increase of 4.4% on the same period a year ago. 

So what can you do to identify customers who are at risk of defaulting on payments due to you especially when you are striving for ever more sales?

We provide a credit scoring report on Limited companies, sole traders and partnerships.

You are able to receive a report on your selected customer within 36 hours which provides you with:

  • A current credit rating and suggested credit limit

  • Key ratios based on the last three years statutory accounts

  • Highlighted changes in assets and liabilities over the three year period

  • Findings of a County Court judgement search

Armed with this information you will be in a strong position in deciding whether to advance credit and how much.

Pricing: 35 plus Vat to receive a report within 36 hours.

New customers

A large proportion of new businesses do not survive two years and the majority collapse in the second year. This implies that companies who fail to monitor the health of their customers, particularly in the second year of the relationship will run the risk of having an uncollectible debt from this group.

However, as statutory accounts information for a private Limited company does not have to be filed with the Registrar of Companies until 10 months after the company's accounting reference date (year end) a company that has a bad set of results can withhold the information from public scrutiny for a considerable period of time. Checks directly with Companies House would prove very limited in these cases.

Extending a pro forma system of advancing products or services past a reasonable time limit runs the risk of losing sales to a competitor. So what can you do?

  • Running a credit scoring report will provide a certain level of information, for example any County Court Judgements that have arisen.

  • Asking your customer to provide you with a copy of their management accounts and if possible forecasts

  • Taking out credit insurance on the selected customer if available

If you require us to assist you in evaluating any of the information you receive in connection with your evaluation of customer credit risk please contact us.