Credit scores? I argued for a long time that credit scores don’t actually exist. All lenders take a view on what is and isn’t acceptable to them. The more interesting part is the detail that makes up the credit rating.
That still stands. However, more and more suppliers, as well as lenders, are looking at company ratings on Creditsafe, Delphi or Dun & Bradstreet. They do this not only when lending but when advancing supplier terms, payment terms or credit limits.
So beware, a perfect storm is brewing.
Year End Accounts
The latest accounts now being filed by companies will incorporate the Covid impacted period. This means that as companies look to grow and return to some normalised trading, the accounts they file will likely be poorer than those accounts already held by credit agencies and as such the credit rating, and suggested credit limits, will be lower. Ouch.
Just as those supplier terms are needed because trading is picking up, those same limits will be lowered. This means lessened payment terms, lessened supplier limits and a big hit on cashflow at precisely the wrong time.
How To Solve The Perfect Storm
Let me dispel a few myths and get your grey matter working;
- It isn’t just annual accounts credit agencies consider
- You can provide interim or management accounts to credit agencies
Think about this. You file a poor set of accounts, albeit for a very good reason. But, things have picked up since that last year end (which is probably nine months since anyway), so you submit your latest year to date figures which are much better.
Credit rating improves, credit limits normalise and you move on.
Now imagine you doing this whilst your peer competitors try to trade through a really tough period. Sounds better, right?
Lightbulb will provide a free overview of your company credit rating, compare this to the leading credit agencies and show where and why any rating has been impacted. This provides a great starting point. From there Lightbulb will start to address the key points and work with you to put the rating back to where you want it.
Take a look as the results seen have been really positive.
Any questions, let me know,