Written by Craig Evans
Posted on 18/10/2016

How to predict a business’s success or failure

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Knowing whether a business is likely to succeed or fail over a 12-month period is the kind of insight that can revolutionise your credit management process. Graydon’s Augur Score aims to do just that – ensuring your business can excel in credit management.

Credit reports are an important part of credit management, particularly the Augur Score – which is an empirically derived commercial credit score. The scoring model gathers together a range of key information and delivers an assessment of credit risk in a single, easy-to-use format.

To provide unprecedented insight, more than 2,000 characteristics are used, offering a score ranging from 0-600. With this level of granularity, businesses are able to make far more accurate decisions.

For incorporated businesses, the Augur Score predicts the likelihood of financial stress within a 12-month period. For unincorporated businesses, it predicts the likelihood of payment delinquency, as well as negative public information, within a 12-month period.

How the Augur Score is created

When ordering an Augur Full Report, you will receive:

  • Augur Score and analysis;
  • credit recommendations;
  • company identification details;
  • full legal information;
  • details of shareholders and directors; and
  • four years of profit and loss and balance sheet data.

Drawing on insight from businesses that have defaulted, the Augur Score uses retrospective analysis to establish optimum score thresholds – helping you decide which customers to work with, and how much credit to extend.

Traditional credit risk monitoring tends to revolve around certain events, such as when accounts are filed, County Court Judgements are posted – or if payment performance deteriorates. The Augur Monitoring Service, however, focuses on changes in the Augur Score, rather than the events themselves. This provides you with a more balanced view of how these events impact the risk profile of your customers, instead of simply noting that an event has occurred.

How this aids your business

With a focus on score changes rather than events, you can set up monitors to highlight when there is a significant shift in your customers’ profiles.

Graydon also provides commentary that puts the score in context of other businesses across Graydon’s database. You’ll receive key data, such as payment information, legal and company identification information, balance sheet data and County Court Judgments; so you have all the information you need to interpret the score and make your final decision.

Portfolio analysis

At a portfolio level, being able to assess scores in context will help you set more effective credit policies across your book.

Augur distribution graphs can also instantly highlight the current risk within a ledger. This can be compared over time to show how levels of risk have changed. As the Augur Score is continually tracked, realigned and redeveloped, it ensures the predictive power of the model evolves as your customers’ circumstances do.

Providing the most up-to-date, precise and relevant scores across all types of businesses, the Augur Score can assist you in making consistent and accurate decisions over time. It will also ensure that changes in business objectives and fluctuations in economic climate can be quickly and accurately reflected in your credit risk management.

Download the Augur Score brochure to find out more