There are several credit rating agencies out there and their first port of call is usually the filings at Companies House. Anything within filed financial statements such as a reference to going concerns in an audit report, or simply that the balance sheet is showing negative reserves, will be noticed.
This leads to a downgrade in credit ratings. However, the agencies will also look at other factors (including trends) where the information is freely available such as:
The time it takes for customers to pay
How long it takes the business to pay its suppliers
Cash flow and level of borrowing
Defaults on loan payments
Not paying HMRC on time
The data and financial stability of other companies that the directors are associated with
The credit scores of directors themselves
One other important factor to consider is the late filing of documents at Companies House. Not only will they lead to penalties, but the credit rating agencies only ask themselves why and mark you down.
We have recently come across a few businesses that have been unfairly marked down by the agencies. We can't always perform miracles, but we do have a great contact within a firm specialising in improving company credit ratings where it can legitimately be done.
Until next time ...
ROGER EDDOWES Business Godparent
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Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach.
Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.
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