Company Credit Ratings
Arriving at your rating - Key Indicators
As we're sure you can appreciate SoloCheck.ie helpdesk staff cannot comment on the make-up or breakdown of individual company credit scores. Our credit algorithm is currently one of the most up-to-date credit scoring models on the market and takes into consideration a wide array of factors currently facing and challenging Irish businesses. For example, in 2017 our credit reports managed to predict over 80% of unfavourable business failures. The main factors considered in arriving at a credit score for a company are covered below.
SoloCheck reported more than 1,000 Irish limited companies failed in 2017; companies that went out of business in unfavourable circumstances leaving unpaid debts.
What links all these failed companies is that there are usually significant signs indicating that the business is getting into difficulties or is unlikely to survive any prolonged downturn in the economy. Warnings of an upcoming insolvency include: poor cash flow, which can be seen through the current ratio and the quick ratio; an over reliance on interest bearing forms of capital, which can be seen through the gearing ratio, together with low margins and inadequate capital. These financial trends, interpreted correctly by SoloCheck will provide a real insight into a company's resilience and its ability to cope with financial stress.
In order to predict insolvency in a commercial business-to-business environment, the SoloCheck scoring models use statistical probabilities, analysing the characteristics of companies that have gone out of business unfavourably and using this analysis to predict the likelihood of other companies becoming insolvent. The SoloCheck scorecards also takes into account other factors, such as recently registered bad debts money judgments, and the Auditor Reports and certain types of mortgages to provide the enhanced predictiveness needed to accurately predict business insolvency/failure.
The Scores can be interpreted using the following table:
|Risk Score||Risk Rating Band||Traffic Light|
|80 - 100||Low Trade Risk||Green Light|
|60 - 79||Fair Trade Risk||Orange Light|
|40 - 59||Caution Advised||Red Light|
|20 - 39||Caution High Risk||Red Light|
|0 - 19||Guarantees Advised Very High Risk||Red Light|
The Maximum Credit Recommendation takes into account the Risk Score.
Improving Your Credit Score
Is your company credit score less than you expected? Review our tips below to help improve your score.
Always make sure you file your accounts on time at the CRO; late filing will have a severe impact on your credit score for a considerable period of time.
Don't take on trade credit commitments where you don't think you can meet the repayment dates; credit scoring companies can tell if your company is paying its bills late and running up disproportionate short term liabilities. Late payments will have a negative impact on your company's credit score.
Keep inventory levels under control to maximise the liquidity of your current assets; poor liquidity or an over reliance on rapid turnover of inventory will have an adverse impact on your company's credit score.
If the directors have made loans to the company, consider increasing the capital and converting director's loans to equity; a high debt to equity ratio will count against your company's credit score.
If the company has become insolvent and the total shareholders funds will be in deficit, consider approaching creditors with a view to converting debt into equity; insolvency could count against your company's credit score for a considerable period of time.
If the company is heading for an operating loss, review all of the business overheads and any potentially unprofitable contracts with a view to making cost reductions and efficiencies to minimise and trading losses. Reduced margins won't necessarily adversely impact your company's credit score but significant loses will.
Make sure investments in fixed assets, such as plant and machinery are proportionate to the size of the owner's investment in the business as measured by shareholders funds; if the proportion of shareholders funds invested in fixed assets is too high, this will count against the company's credit score.
Maintain a healthy balance between debt and equity; an over reliance on interest bearing forms of capital will adversely affect your company's credit score.
If your company is taken to court by a claimant, either settle the claim or defend the claim; don't allow judgments to be registered against your company by default or this will have a seriously adverse impact on your company's credit score.
Engage with your Auditors during the annual review and make sure they have a satisfactory answer to any questions raised during the audit; make the time for an end of audit review, which should include the text of the Auditor's report; any qualified remarks from the Auditor can have a serious impact on your company's credit score.
Don't Agree With a Rating?
SoloCheck.ie have spent over two years developing one of the most up-to-date and highly advanced credit scoring models in Ireland. This model successfully predicted over 80% of all business failures in 2017! So why is it so effective...
- This is one of the latest and most Up-to-date Credit Scoring Models in Ireland.
- Our Credit Reports specifically cater for assessing risk in the downturn while balancing the need to conduct business.
- Unlike any other model in the market, this was built considering today's critical risk factors using hard economic facts resulting in a highly predictive score.
- It is based exclusively on the Irish economy, unlike many others which are imported from UK, and simply applied to Irish companies.
- Every Credit Score is reviewed every day to check for any new data which may affect the score. This ensures that we will keep the Credit Score live and alert you should there be any change.
- SoloCheck uses innovative new technology, to interpret key factors both financial and non-financial which we have found to be predictive in assessing business risk.
We are mindful that our credit scores are based and limited to publically available data, including the latest set of accounts, judgments registered and notices published. We have found that for 80% of cases these factors are very predictive of business performance, in 20% of cases factors outside of publically available data also need to be considered by the client. At present our Credit Ratings do not take into consideration anecdotal information from companies however this is something we are looking at possibly incorporating in the future. If you don't agree with a rating we are providing why not let us know to support@SoloCheck.ie.
Solo Check is a registered tradename of CRIF VisionNet Limited. Irish Registered Number: 177790