One of the quickest ways to positively impact your bottom line is to effectively manage your business credit risk. Portfolio Scoring enables you to assess risk by viewing up-to-date information on your entire commercial portfolio, including how customers are paying other creditors. It assigns a score to each of your customers which translates to the amount of risk you are assuming given the state of their current financial situation. But what types of scores are provided?
Xactus offers Portfolio Scoring from Experian and it includes two types of scoring models:
- Intelliscore Plus V2 predicts the likelihood that the business will become seriously delinquent within the next 12 months. Serious delinquency is defined as more than 90 days past terms. Intelliscore Plus is a business credit score created by the credit reporting agency Experian. The score ranges from 0 to 100, with the higher the score, the lower the risk. A score of 76 and above is considered good.
- Financial Stability Risk Score provides critical insight on the potential of a business going bankrupt or defaulting on its obligations. It offers a quick assessment of risk with an easy-to-understand 1 to 100 score range and a 1 to 5 risk class that segments businesses into risk categories, with the highest risk in the bottom 10 percent of accounts.
Both scores are automated, taking into account public records and how the businesses are paying their bills. Some of the key characteristics of companies that have a high stability risk and earn high risk scores include:
- Severe payment delinquency on 61 day plus and/or 91 day plus past due trade experiences
- Accounts placed for collection
- High credit utilization
- Derogatory public filings
- Business background such as industry risk and age of business
When used together, the Intelliscore Plus V2 and Financial Stability Risk Score provide a clear road map for companies that extend credit to other businesses. It helps identify customers that are slow to pay but will eventually pay as well as their overall financial stability.
Minimize credit risk and ensure payment from your customers with Portfolio Scoring. For more information, contact your Xactus strategic account manager.