The research, by accountancy firm Shelley Stock Hutter, found the agencies also failed to agree whether small companies’ credit risk is improving or deteriorating. A company given a credit limit of £67,000 last year by D&B has seen its recommendation improve to £108,000 this year. However, Experian’s recommended limit of £25,000 for the same firm last year has declined by almost two thirds to £8,400.
The issue isn’t isolated to small firms – a medium-sized business was given a credit limit of £400,000 by Experian, while D&B suggested £5.7m.
Bobby Lane, a partner at Shelley Stock Hutter, called for a Government “code of transparency” to force agencies to be more open about how they arrive at their recommendations. “Some small businesses could be forced to cease trading due to the effects of these inconsistent ratings.”
Banks use external credit reference agencies to inform small business lending decisions but the impact of inaccurate ratings is likely to be most severe in trade credit provided to small businesses by suppliers.
Research by the CBI and the ACCA, the accountancy body, has found that the trade credit market is more important than bank lending for small companies, but firms are relying on incomplete and dated information to measure risk.
Philip King, chief executive of the Institute of Credit Management, the credit industry’s professional body, said Government drives to reduce small companies’ accounting requirements were partly to blame for “skewed” ratings.
“Suppliers need to get something off the shelf to decide if a company is credit worthy or not. Agencies all use their own different models but the fact that there isn’t much information from Companies House means they rely more on other information – and that can skew [ratings].”
The Government is considering plans to let companies with sales of less than £440,000 or 10 staff file a simplified trading statement rather than accounts. Mr King said that would “stifle credit and growth”.
“If no information is filed, nothing is available and that’s a real risk. We’ve already got small companies filing abbreviated accounts, which frankly makes them not that useful – but at least it’s something.”
A spokesman for Credit Safe said: “There are always going to be discrepancies between ratings because different credit reference agencies use different pieces of information and different models [to measure] different outcomes.”
D&B said agencies’ “methodologies ... are different enough to produce different scores and credit limits for the same business” and it supplies customers with a “rating guide” to help them understand how scores are arrived at.
Experian said the discrepancies are partly down to its use of payment performance data and consumer credit information “to provide a more comprehensive picture on the business and the people behind [it].”
Finance board: Voters should decide energy-saving contract - Eagle-Tribune
NORTH ANDOVER — The battle of the boards over energy saving continues.
While the Finance Committee did not take a formal vote on the issue Tuesday night, the advisory board is moving toward recommending that contracts of more than three years be approved by Town Meeting. The committee is particularly concerned about a proposed $4.3 million contract with Ameresco, a Framingham energy services firm,
Ameresco has said it will reduce the town's energy consumption and costs by making a host of improvements to buildings, including boiler replacements and more efficient lighting. The town would pay back the $4.3 million over 15 years and that bothers Finance Committee members.
The selectmen and School Committee, as well as Town Manager Andrew Maylor and Assistant Town Manager Raymond Santilli, support a pact with Ameresco.
Article 3 on the warrant for the June 12 Town Meeting authorizes the town manager and superintendent of schools to award contracts for more than three years if four selectmen or four School Committee members approve.
Finance Committee member Peter Besen proposed amending the article to require that such contracts be approved by Town Meeting.
"We don't want it to happen administratively," his colleague, Benjamin Osgood, said about the possibility of a contract with Ameresco being approved without voters' approval.
Thomas Dugan, presiding in the absence of Chairman Alan LeBovidge, said board members need to agree on the language of an amendment before moving forward with it.
"We don't have to make a decision tonight," Dugan said. The board invited Ameresco to send a representative to its meeting last night, but the company declined to do so, according to Dugan.
Dugan, Osgood, Matthew Remis and other Finance Committee members have said the board has not been given sufficient information about Ameresco to make an informed decision.
Barclays plc appoints Head of Asset Finance, Corporate Banking - Director of Finance online
Barclays plc (LON:BARC) has appointment Dennis Watson as its new Head of Asset Finance within the Corporate Bank.Watson is already responsible for the bank’s real estate, project finance and mezzanine debt origination teams and will assume control of the Asset Finance business, taking over from Alex Brown who has moved across to spearhead Barclays representation in the education, local authority and social housing sectors.
The change of leadership comes as Barclays reshapes the way asset finance is delivered to its corporate banking clients.
Dennis Watson explains: “We are not changing our appetite for asset finance, far from it, but what we are doing is bringing asset finance alongside our other asset backed and working capital debt propositions, enhancing the client experience by identifying needs earlier and supporting them with the right capital structure from a wider range of products.
"In today’s uncertain world it is important that a client’s debt needs are viewed in the round rather than on a single asset or transaction basis.
"Alex ran the asset finance business with great success in recent years, putting the business on a solid footing for the future and it is only through the efforts of him and his team that asset finance has become such an important instrument in the debt toolbox for Barclays”.
Forex: USD/CAD hits fresh 2012 high - FXStreet.com
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