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Creditworthiness “crisis” for business

29 August 2013

Creditworthiness “crisis” for business

Firms carrying a credit rating which could hit their ability to get finance and good credit terms from suppliers has climbed further during the last three years, new research shows.

According to work from credit risk management agency Graydon UK attitudes towards sharing financial information are making the situation worse than it needs to be and are “exacerbating creditworthiness crisis”.

Its new study of approximately 2.5m incorporated businesses in the UK found 69% were assessed as being “high risk” or “above normal risk”, in terms of defaulting on trade payments or getting into financial difficulties.

This compares with a figure of 60% when a similar survey was carried out in June 2009.

In contrast, however, just 5% of the companies reviewed were awarded “low risk” ratings, compared with a figure of 13% three years ago, confirming a slight upsurge in the proportion adjudged to be “normal” in their risk level.

Graydon UK external spokesman Gordon Skaljak said: “These figures underscore the importance to companies of making detailed financial performance information available at a time when credit remains scarce.

“This is especially important for unincorporated businesses, who still suffer from the absence of a central UK registry to lodge details about their operations.

“The continued erosion of data stored at Companies House and the reluctance of Government to pass legislation to prevent this is not helping.

“Politicians must understand that in this case, so-called ‘red tape’ is not by definition a bad thing.”

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