What is a corporate credit rating?
Credit ratings are used to make an assessment about a business and its ability to meet financial commitments. Company credit scores can therefore be critical for securing finance, trade credit and winning contracts.
Working with our systems and key credit agencies, RSM can enable companies to understand their credit rating and assess whether it can be improved.
Why is a corporate credit rating important?
Credit ratings are often used by stakeholders to assess if they should provide supply, award tenders or new work to companies. This is particularly true of public sector contracts.
Suppliers may use the credit rating and other related scores to assess if they should extend or restrict credit to a company. If the rating is artificially low, this can reduce working capital or access to finance.
What is a low credit rating?
This can depend on the credit agency and nature of the business. For example, a score of below 20 out of 100 is likely to cause issues. For some organisations, a score of below 50 can be problematic, particularly if tendering for contracts.
Symptoms of a weak credit rating include:
- failure to win tenders;
- suppliers unable to obtain credit insurance;
- restricted working capital; or
- reduced access to funding.
Why would my credit rating not reflect the current performance of the business?
Out of date information is one of the factors that can contribute to a low score or it may not reflect the support of a parent company. We are experienced working with agencies and businesses to ensure that the rating reflects accurate and current information.
How can a company improve its credit rating?
RSM’s specialist credit rating team works with key credit agencies and has access to systems which explain why the company’s score is low. We can help company Directors to understand their current score and diagnose whether the issue can be solved. We have an excellent track record in improving our clients' credit score.
Contact us for more information on how we can help, project timescales or pricing.