Management Accounts Sharing
Greater need for financial data sharing and improved processing
6 out of 10 SME businesses carry a credit risk rating above normal, affecting their ability to obtain credit finance and favourable credit terms from suppliers. In other words, 60% of SMEs would seem to be higher than normal risk in terms of defaulting on trade payments or getting into financial difficulties. It is also true that the sheer absence of relevant financial data on small businesses does adversely affect a business’s credit score.
Your customers, small businesses in the UK, often suffer from poorer credit scores because:
- there is no central registry in the UK for unincorporated firms to lodge even basic details about their existence, and
- successive governments have passed legislation reducing the amount of financial information incorporated companies have to file at Companies House. Credit grantors are being starved of valuable data to help make positive decisions as a result.
It is important to recognise that sharing of financial information is now vital to improve SMEs credit profile, improve trading conditions and keep trade alive. This information needs to be accurate and current. Businesses need to understand the importance of providing such data to the companies and agencies that seek it. Without that information, credit reference agencies and credit insurers will struggle to justify making a positive recommendation, and future business will undoubtedly be affected.
Obtaining management accounts can be difficult. Processing, including validation, can be time-consuming, work-intensive and costly. The costs for obtaining, processing and validating just one set of management accounts can vary typically between £50 - £250 depending on your procedures on a case by case basis. This can be greatly improved through the creation of Management Accounts Sharing Groups. If you have a need for validated and standardised management accounts on your customers, or your buyers' risks - you should consider this concept that can considerably reduce your processing costs and increase the speed and efficiency of your credit-decisioning process. Graydon can help you by creating a Management Accounts Sharing Group for your organisation (or your group of companies).
The concept of Management Accounts Sharing Groups can be utilised for just one organisation or created for a group of companies. This can benefit almost any kind of organisation that needs to use management accounts, for example:
- a large credit insurance organisation may need management accounts on some of their clients' buyer risks' in order to allow credit insurance cover or re-adjust the level of discretionary limits covered; or
- a group of companies / suppliers in a particular industry sector may need this information in order to optimise credit-decisioning on their customers based on the most up-to-date validated monthly management figures.
CreditPal, a new service provided by Future Route, enables SMEs to upload their management accounts securely and send on financial extracts to Graydon's credit database. Access to this data is strictly controlled with the permission of the business submitting the accounts. Data confidentiality is ensured within the Management Accounts Sharing Group.
To learn how validated management accounts sharing groups can be created for you please contact our team at Graydon.
