High risk score on Dunn and Bradstreet
Discussion
A client has flagged up that we have a high risk ranking for financial stability on Dunn and Bradstreet.
Having looked into this, we can see no reason based upon their criteria.
We've no debt or lending. 7 years of year on year growth each with incrementally increased profit. We've cash reserves, pay suppliers well within 30 days, have never had a judgement or anything 'legal' against us.
The only other influencing issues may relate to a business in which I was a 25% shareholder failing during (and as a result of) Covid in 2020 - this was liquidated with no trade or other debts outstanding. And a few years back, our Account incorrectly filed a couple of documents at Companies House. Neither of these would, I would have thought, influence our standing today.
I know we have an average credit rating but this is because we have had no credit on which to be judged. To address this, in 2023 I elected to finance £10k of capital investment through a loan, despite not actually needing to borrow the money. That loan was settled in full in October last year without any payment default. As of today, it has made no difference. I’ve no doubt that further borrowing will, over time, improve our ranking but I am not inclined to do so as this would simply increase our overhead for no material gain.
The only reason I can think of is that the high-risk score is the ‘Industry Risk’. We are a full-service marketing and communications agency. We only work for Public Sector clients and within a very narrow band of projects that support behaviour, social and environmental change. However, the business classification system only allows us to register as a generic ‘Advertising Agency’ or ‘Marketing Firm’. These sorts of firms are indeed exposed to economic vagaries which places them at higher risk. However, we tend to be protected from such vagaries by virtue of the work we do often being of vital public importance regardless of the health or otherwise of the wider economy. Added to this is that half of our work is international which spreads what little risk exists across different economies. None of these virtues can be properly identified in the current system of business classification. We are therefore reliant upon our financial performance to compensate but because we have no debt (and don’t actually buy that much) we have no way to demonstrate this. We’re reliant on an algorithm that doesn’t have the capacity of critical thinking.
In short, it seems we're being penalised for running a tight, efficient, debt-free ship!
Does any one know if we can contest the scoring. Has anyone successfully done this?
Having looked into this, we can see no reason based upon their criteria.
We've no debt or lending. 7 years of year on year growth each with incrementally increased profit. We've cash reserves, pay suppliers well within 30 days, have never had a judgement or anything 'legal' against us.
The only other influencing issues may relate to a business in which I was a 25% shareholder failing during (and as a result of) Covid in 2020 - this was liquidated with no trade or other debts outstanding. And a few years back, our Account incorrectly filed a couple of documents at Companies House. Neither of these would, I would have thought, influence our standing today.
I know we have an average credit rating but this is because we have had no credit on which to be judged. To address this, in 2023 I elected to finance £10k of capital investment through a loan, despite not actually needing to borrow the money. That loan was settled in full in October last year without any payment default. As of today, it has made no difference. I’ve no doubt that further borrowing will, over time, improve our ranking but I am not inclined to do so as this would simply increase our overhead for no material gain.
The only reason I can think of is that the high-risk score is the ‘Industry Risk’. We are a full-service marketing and communications agency. We only work for Public Sector clients and within a very narrow band of projects that support behaviour, social and environmental change. However, the business classification system only allows us to register as a generic ‘Advertising Agency’ or ‘Marketing Firm’. These sorts of firms are indeed exposed to economic vagaries which places them at higher risk. However, we tend to be protected from such vagaries by virtue of the work we do often being of vital public importance regardless of the health or otherwise of the wider economy. Added to this is that half of our work is international which spreads what little risk exists across different economies. None of these virtues can be properly identified in the current system of business classification. We are therefore reliant upon our financial performance to compensate but because we have no debt (and don’t actually buy that much) we have no way to demonstrate this. We’re reliant on an algorithm that doesn’t have the capacity of critical thinking.
In short, it seems we're being penalised for running a tight, efficient, debt-free ship!
Does any one know if we can contest the scoring. Has anyone successfully done this?
Gassing Station | Business | Top of Page | What's New | My Stuff