On January 1st 2010 we introduced one of the most predictive models in the Industry. The new model has been developed in response to the current economic environment. At EU & UK Data we want to ensure that our scoring model provides the best possible business intelligence, to further protect against the threat of bad debt.
In the current economic climate it is more important than ever that businesses avoid exposing themselves to the threat of delayed or defaulted payments. According to insolvency.gov.uk in Q4 of 2008 a huge 4,167 companies entered insolvency, an increase of 51.6% on Q4 of 2007. Our model has been adapted in response to and ensure that customers continue to make informed decisions about credit risk in harder financial times.
Many credit limits and ratings have been reduced to ensure that you, our customers are not exposed and that risks are minimised. Full details of the analysis can be found on Understanding the Risk Score and Credit Limit.
The variables included in the model and and the weightings of each variable has changed. For example, the previous score (and most of our competitor´s scores) are based mainly on the Accounts. However, a set of accounts in many cases, can be 18 months old and therefore isn´t always a reliable indicator to predict whether a company will become insolvent within the next 12 months. Many companies who have failed recently had very positive balance sheets however they still failed. A balance sheet is a historic statement of affairs, it is not up-to-date and doesn´t necessarily reflect a company ability to remain as a going concern (live and trading).The financials are helpful but on their own will not predict how well a company trades now.
By looking at more recent information such as directors information (number, age, past performance & continuity), CCJ´s, Group influence, Mortgage Information and recent insolvencies in the industry sector as well as the financial information we can make better informed decisions. This has also been statistically proven.
Latest figures show that in the last quarter of 2008 UK insolvencies increased 25% on the previous quarter. As a result of this, the new EU & UK Data Ltd rating is based around the ability to establish the probability that a company will survive or ultimately face insolvency. The new rating ensures that you are in the best position to make informed business decisions based on the stability of the company you are dealing with and the probability of payment terms being met. In addition, this investment enables EU & UK Data to offer credit ratings and limits to newly established businesses, further protecting you when dealing with such companies.
We believe that EU & UK Data Ltd is the only company to have reviewed its credit rating model in light of the credit crunch. As a result, we feel the information within our reports is not only more accurate but also more predictive than the information featured in competitors’ reports. The EU & UK Data risk rating has the advantage of being based on the most recent UK data set, therefore decisions will be accurate and based on the most recent economic variables.
The new rating model is more predictive because it uses more variables, different variables and provides a deeper level of analysis than before. As a result some businesses’ underlying strengths may become clearer. Of course there are also certain businesses which are structured in such a way as to take advantage of the Credit Crunch.
No, the previous rating was developed a number of years ago and is trusted by over thousands of customers to help protect their company against the threat of bad debt. However, at EU & UK Data we are continuously striving to improve the service that they offer customers and therefore invested in current research to ensure that we have one of the most predictive rating models in the industry.
The old model was developed in different economic circumstances and the recent credit crunch has had a huge impact on the economy and trade. A new rating model is essential in protecting our customers against the increased threat of bad debt in these hard economic times.
No. We are providing more “added value” to customers by investing in the rating and credit limit systems and will ensure that our pricing will continue to be one of the most competitive in the marketplace.
If you have based decisions on the old EU & UK Data rating and are now enjoying a healthy relationship with a company based on this, the new rating does not undermine this. However, the credit crunch will require you to be more cautious about the companies you choose to do business with and the payment terms that you set. Our model enables you to make informed business decisions; it is up to individual companies how they choose to act on the data supplied.
The analysts at EU & UK Data Ltd are continuously analysing the economic environment and both our ratings model and the ratings themselves will be further developed as and when conditions dictate.