Credit risk, monitoring & AML

1 RED FLAG – Companies rated with 1 Red Flag have a much higher chance of failure than Bronze companies and represent a moderate risk. A 1 Red Flag company may be in the process of an ongoing downward slide into insolvency or may have held a 1 Red Flag rating for an extended period of time. 1 Red Flag companies are among the weakest 20% of UK companies.

2 RED FLAG – 2 Red Flag companies have a high chance of failure and represent a significant risk. While a 2 Red Flag company may be able to trade back to financial health they are more likely to fail. Any credit offered is done so at extreme risk. There will likely be evidence of recent and/or significant legal notices. 2 Red Flag companies are in the weakest 20% of UK companies.

3 RED FLAG – 3 Red Flag companies represent the most significant financial risk and are on the verge of being declared insolvent. There are likely to be recent and/or significant legal notices, recent and/or significant County Court judgments and will have a deteriorating financial position. No credit should be extended. 3 Red Flag companies make up the weakest 1% of UK companies.

PROVISIONAL RATINGS – Provisional ratings can be applied to Silver, Bronze, 1 Red Flag and 2 Red Flags when a company has only one set of filed accounts. Any company with a provisional rating should be considered as slightly more of a credit risk than a company with the equivalent non-provisional rating.

NEWLY INCORPORATED – These companies are newly incorporated and have not filed accounts and, as such, we do not have the data required to score them, and they remain in this holding rating until the point at which they have the information necessary for them to be scored.

PRE-INSOLVENT – Pre-insolvent companies are usually in the early stages of formally declaring or being declared insolvent and in 98% of circumstances will fail within 28 days. This rating is a precursor to insolvency and, as such, we would not recommend offering credit in any circumstance.