Credit check of companies
Posted On July 14, 2019
Since the introduction of “Basel II”, customers have to undergo credit checks before lending by banks, which are based on the risk premiums or surcharges for the respective credit terms. What many do not know: Companies, especially small medium-sized companies, can have their credit rating checked by the Bank.
The purpose of a credit check
On the one hand, the Bank’s credit rating can be used by companies as the basis for credit negotiations with the bank, and on the other hand, it is possible to negotiate better terms with suppliers. A positive rating can also have a positive influence on future business relationships.
Expiry of the rating
The rating of the Bank is free of charge once a year. The companies already registered will then be reminded to update the rating every year without being asked. In order to be able to carry out a grading, the Bank needs
- the last two financial statements,
- current business documents (BWA),
- a sales, earnings and liquidity planning
The above documents can be sent with a short cover letter and the request for creditworthiness assessment of the own company to the
As with other ratings, qualitative and quantitative factors of the company are evaluated. On the one hand, information on the accounting behavior, the economic situation and the market position is examined, on the other hand the balance sheet ratios, the business plan figures, the current business development and the company relations are evaluated. If necessary, an assessment of the group of companies will be obtained.
The company receives a fact sheet with selected business key figures. Furthermore, the operation is classified in a credit rating class. With rating 1 to 4, the company is “eligible”, ie it operates solidly and sustainably and has a low probability of default, it thus creates negotiating leeway and a good reputation.
A rating of 5 to 7, however, signals a possible imminent economic imbalance. The rating gives companies the opportunity to counteract this at an early stage with suitable measures.