Check employers creditworthiness

Credit check companies: Check the liquidity of companies online

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The term credit check company generally hides the financial reliability of a company, but also of a person. In the broadest sense, it is about creditworthiness, which in turn relates to both creditworthiness and willingness to repay liabilities. From a credit check, not only banks but also potential investors can draw important conclusions about the probability of a payment default or the chances of success of a commitment. But how does a credit check work?

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Established service providers: Company credit checks on request

A tried and tested instrument for assessing the creditworthiness of a company or a person is a special credit agency such as SCHUFA, Creditreform or Bürgel. In particular, the SCHUFA, the abbreviation stands for "Schutzanstalt für Allgemeine Kreditsicherung", was able to establish itself with a large number of banks, service providers or trading companies: You can neither conclude a loan nor a telephone, electricity or gas supply contract without a SCHUFA Query would be obtained. The Volksbanks, on the other hand, concentrate on Creditreform - the procedure, however, is similar.

The credit agencies collect data, which both companies and private individuals give their consent to. This includes not only the number and type of account details, credit card or credit agreements, but also personal data such as address, occupation or employer and dates of birth. By 2014, SCHUFA alone had collected around 728 million data on around 66.3 million natural persons and 4.3 million companies. From this enormous database, so-called score values ​​are in turn calculated in different processes in order to answer the inquiries of the various interested parties.

Tip:Are your customers and partners still liquid? Now to the credit portal.
With the help of our partner and leading service provider EURO-PRO, you can check the creditworthiness of companies and private individuals online at a reasonable price.

Data and Score Values: Two Sides of the Coin in Business Credit Checking

The data basis for the so-called scoring is not just the specific information on a specific person or a specific company, but a group or an industry is used. Different priorities can be set in order to quantify the risk of a payment default. For example, an electricity provider would prefer to pay attention to the frequency of the change of residence, but a bank to irregularities in payment transactions and the number of bank accounts or credit cards. The score values ​​can therefore only provide an indication of the probability that a loan or a liability will be serviced on time.

On the other hand, the credit check company lists all loan liabilities, credit card limits or installment payment agreements. Should there be irregularities in payment behavior, i.e. from qualified dunning procedures to the submission of an affidavit or the initiation of insolvency proceedings, this can be traced in detail using a credit report. Once the processes have been completed and a corresponding message has been sent to SCHUFA, this is also noted - but the entries can still be viewed for a long time.

Important conclusions from this credit check company

This institutionalized type of credit check already gives business partners, suppliers, banks and service providers an insight into the expected creditworthiness: If problems in payment behavior are already registered, it is unlikely that a German bank will issue a loan. For suppliers and service providers, this notice means that additional securities may need to be agreed to ensure a smooth process. If the deal is high-risk anyway, you can either adjust the terms and conditions - or you can refrain from doing so.

It is difficult for companies that are active in a poorly rated industry - even if their own figures or entries do not allow any negative conclusions. Significantly more efforts have to be made here, for example to convince a bank of its own creditworthiness. After all, with many loans, the conditions are made dependent on the credit rating: the worse the scoring, the higher the interest. Another criterion when checking a company's creditworthiness is therefore the company's ability to service debt - the expanded cash flow.

Calculate debt servicing ability - make a real assessment of companies

The so-called cash flow describes the net inflow of liquid funds within a certain period and thus the liquidity of a company. The bottom line is that the cash flow is quantified as the surplus of regular operating income after deducting expenses. This economic indicator shows the extent to which a company can finance itself or reliably provide financial services. In contrast to the balance sheet profit, the distorting factors are not taken into account here, since, depending on the calculation method, there are either cash or non-cash income and expenses.

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The cash flow is used to calculate other key figures, such as the cash flow return on investment, which is of particular interest to investors. At the same time, the upper limit for debt service can be determined in order to be able to assess the debt service capacity. However, since this statement does not yet allow any reliable conclusions to be drawn about the liquidity of a company, extensive financial plans must be drawn up for assessment.

Comprehensive credit check for companies: interplay of various factors

A complete business report is particularly recommended when checking a company's creditworthiness. This data collection contains all relevant information, such as company history and development, investments or branches, business figures and bank details, loan liabilities, current financial situation and negative features. Combined with a current credit report, this results in a picture that can be used as a reliable basis for decision-making.

Most important credit criteria companies

  • Economic indicators - First and foremost, the balance sheet figures are among the essential points that are checked, i.e. the annual financial statements, the equity ratio, the cash reserves as well as the operative and free cash flow. The development of profits and losses can allow further interesting conclusions to be drawn about the probability of a payment default.
  • Other key figures - The quality of management is difficult to put into key figures, but it plays a major role for the perspective of a company. In addition to investing activities, the ratio of assets to debts is just as important for a realistic assessment of creditworthiness.
  • Credit information and score value - The rating gives at least a basic assessment of the creditworthiness, as assessments of "investment grade", i.e. very good creditworthiness, are given up to the probable default.

Conclusion: The credit check provides a certain level of security

In order to be able to assess the success of future business or engagements, banks as well as service providers and trading companies use the credit check for companies, which is offered by various service providers for companies and private individuals. The data collected here are used, on the one hand, to calculate an industry-specific score and, on the other hand, to point out any payment irregularities from the past.

From this information, conclusions can be drawn about future creditworthiness - which, of course, can only be a forecast. It is all the more important for companies to work with reliable financial plans and business evaluations. Last but not least, the cash flow and a whole range of other economic key figures as well as facts about the company itself can give a realistic picture of the financial situation.

Tip:Are your customers and partners still liquid? Now to the credit portal.
With the help of our partner and leading service provider EURO-PRO, you can check the creditworthiness of companies and private individuals online at a reasonable price.