Graydon UK & Validis announce intention to launch
Enhanced Credit Information Service

Wednesday, May 6th, 2009

• Gives SMEs the Opportunity to Better Control the Supply of Key Business Performance Information required by Credit Reference Agencies and their Customers

• Enables More SMEs to Benefit from the Government Trade Credit Insurance Scheme

Small and medium sized enterprises (SMEs) in the UK are set to be given the opportunity to seize greater control over the information provided about them to prospective creditors by credit reference agencies. This will help increase their access to both finance and credit insurance cover that has been hit hard during the current economic crisis.

The news follows today's announcement from commercial credit agency Graydon UK and Validis, a web based business accounting data analysis specialist, to jointly launch a new enhanced credit information service for SMEs. The Graydon Enhanced Credit Information Service Powered by Validis, is the first credit information service of its kind and is expected to launch in Summer 2009.

This service is designed to meet the Associated British Insurance's suggestions published last week in their paper 'Advice to Businesses Regarding Information Requests from Trade Insurers' (read the full article (.pdf)) 'The focus for any risk-assessment is to reflect the current trading position and be forward looking, so companies will need to provide management accounts and financial projections rather than relying on the most recent set of filed financial accounts, which could be both historic and reflect a vastly different trading environment.'

Clearly, the Graydon-Validis service will play a crucial role in ensuring that SMEs are better placed to access the benefits of Government's trade credit insurance scheme, announced in the recent Budget. The scheme offers UK firms the opportunity to purchase "top up" insurance from the Government if credit limits on their UK customers are reduced. As BERR made clear in last week's Accountancy Age 'Whatever accounts the industry uses to get their impression of a company, that's what we'll be using.'

The Graydon Enhanced Credit Information Service Powered by Validis will be based on a company's latest monthly management accounts. SMEs using the service will benefit as assessments made of their financial strength and viability by banks, credit insurers, factors, suppliers, invoice discounters and ratings agencies will be based on latest validated monthly management accounts.

In order to maximize the protection of very sensitive management accounts information, Validis employs the highest possible levels of security to protect privacy and safety of the accounting data. All information is secured during its transmission and can only be accessed over secure internet sessions. Validis is hosted in a world-class datacenter that works to the best possible standards of SAS70 type II and Sarbanes Oxley with numerous levels of physical and electronic measures protecting against unauthorised access.

Prior to a company authorising dispatch of their financial information, executives and accountants use the Validis software to validate and analyse their monthly management accounts. This service will assist users by identifying potential issues, anomalies and errors in their management accounts, thereby ensuring their content is compliant for use as part of the credit-rating process. Validis' advanced accounts review solution is capable of recognising different accounts structures, so it can extract and interpret data from a wide range of accounting systems, then convert the information into a common format, to produce standardised feeds.

This validated information will then be channelled to Graydon UK and incorporated into its existing credit information database. The validation process ensures that companies seeking access to finance can do so knowing that assessments of their creditworthiness are being based upon information that has been independently confirmed as being trustworthy and reliable. Graydon UK and Validis expect that businesses will have the opportunity to strengthen their own credit recommendations as a direct result of using the service.

This need is best summed up by Stephen Alambritis, Head of Public Affairs, Federation of Small Businesses,

"Graydon and Validis could not have come together at a better time to provide such a 'must have' service for the UK's 4.7 million small businesses. Last month the Chancellor's budget put in place a really useful top up trade credit insurance scheme. This month the Treasury Committee reported on its concerns about the availability and terms of credit to the small business sector and the slow movement on this issue by the banks. The Graydon Enhanced Credit Information Service Powered by Validis will definitely come to the rescue of many firms wanting to access both finance and credit insurance cover."

However, the use of up to date standardised and validated monthly management account data will also help to ensure that firms which would have been adjudged high risk based on historical financial information are rightly assessed as meriting protection under the terms of scheme. This will enable them to continue to trade as the economic downturn continues.

The launch of the new service will also mean that UK companies will no longer be obliged to rely solely upon historic annual statutory accounts filed at Companies House, which have until now been used by providers of finance and credit as the main basis for assessments of companies' strength and viability.

Whilst this historical financial trend information plays an important part in credit scoring, the use of up to the minute fully validated management account information will significantly enhance the quality of credit decision-making.

Under the terms of its agreement with Validis, Graydon UK will be the exclusive distributor of management account information received from users to all other credit reference agencies.

Martin Williams, Managing Director, Graydon UK, said:

"This service will be a global first and represents an enormous step forward for the commercial credit referencing industry. We also believe it will play an important role in helping to restore the flow of finance to UK companies in what has become a market starved by macro-economic conditions."

"Commercial lenders are thinking longer and harder than ever before about the extension of credit as the severe economic downturn continues. They also need to be able to base their decisions on reliable detailed financial data and insights. It is essential therefore that credit reference agencies do everything within their power to offer credit recommendations based on up to the minute information."

"Enabling the basing of creditworthiness assessments on independently validated and current monthly management account information will enhance further the overall quality of recommendations made by credit reference agencies."

Martin Williams added:

"It will also increase credit granters' confidence to approve financing requests in cases where businesses are able to honour their commitments and ensure that as many SMEs in the UK are able to access the protection provided by the Government's newly announced Trade Credit Insurance Scheme."

Christopher Poll, Chairman & CEO of Future Route, Validis parent, added:

"SMEs are the backbone of the UK economy. If the nation is to successfully navigate the current crisis, it is no longer sufficient for organisations providing information to prospective creditors to base their assessments on statutory historical data alone."

"We're offering a fundamentally new model for the way in which SMEs operate, especially in the availability and costing of their finance and credit facilities. Validis' software gives SMEs and their accountants the ability to quickly and comprehensively reassure themselves that they can cost-effectively and time-efficiently provide verified and validated management account information for an up to date assessment of financial risk by creditors or providers of finance. The recipients will feel much more confident that they have to hand both the insight and information they need to price risks appropriately."

"We believe that this is a fundamental change in the way UK business in general, and the credit information industry in particular, is managed. Graydon-Validis have combined to inject a new commercial realism into the UK economy at a time when the banks and the credit industry alike continue to be partially paralysed in a terms of lending activity."

More information

To learn more about this new service, please visit: http://graydon.validis.com or read this fact sheet about the service.

 

About Graydon UK:

Graydon UK is one of the leading database information providers specialising in credit risk management and risk assessed marketing lists. The company helps clients reduce the uncertainty of doing business by providing a complete, differentiated and high-quality package of credit risk management services. Graydon provides access to credit information and reports on companies in more than 130 countries worldwide. The Graydon group is owned by Atradius, Coface and Euler Hermes, three of Europe's leading credit insurance organisation.

In 2008, Graydon UK Managing Director Martin Williams was invited by Philip King, Director General of the Institute of Credit Management (ICM), to join the ICM think tank (an expert panel of 20-25 industry leaders who meet quarterly and act as an influencing force on all issues related to the credit industry in the UK.).That same year, Martin Williams was honoured by Credit Today, after being included on their Credit 100 list of people who have had the greatest impact in the credit industry during 2008.

For more information visit www.graydon.co.uk.

 

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