Access Valuable Private Company Data through Trade Contribution
In the credit industry, management is often saddled with too much work and not enough help to complete the piling excess in their inboxes. Figuring out where the biggest risks are within a large portfolio of financial counterparties is, at best, a daunting task. Complicating the effort is the fact that information on public companies is often easier to get than on private ones, so comparisons between the two can be difficult. With CreditRiskMonitor’s Trade Contributor Program, the gathering and assessment of public and private company data no longer alludes credit professionals, making it easier to uncover where dollar risk lies and allowing credit managers to be proactive rather than reactive.
Uncovering Where Risk Lies: Stratification of Dollars
If a portfolio is boiled down to 80% private companies and 20% public companies, a credit manager might believe that the dollar risk is commensurate to that 4:1 ratio. However, the Trade Contributor Program reveals that the percentage breakdown of private-to-public companies is more of a “50-50” proposition - in actuality, public companies average 53% of typical dollar risk exposure. With limited resources, it is vital for credit managers to focus on the biggest risks.
Typically, clients find out that public companies are the source of more dollar risk, even if their portfolio is made up of mainly private companies. The relatively large size of public companies usually means these financial relationships involve more dollars.
When a risk professional provides accounts receivable (A/R) data, the CreditRiskMonitor system analyzes the information to determine where dollar risk actually lies. Once this information is established, we’re then able to provide you with exactly how many dollars are tied to which companies:
A Private Company in Your Portfolio Might be Owned by a Public Entity
More often than anticipated, a public company files for bankruptcy and its subsidiaries, which may be private, are included in the wreckage. This creates unforeseen loss in your portfolio. Trade contributors provide information to us on each customer: address, name, phone number and account number. With access to the address and phone number for your customers, we’re able to compare the information to what we already have in our system.
Our system often matches a private entity to a publicly traded company, unveiling a relationship that can result in more exposure than originally thought. From the “Receivables at Risk” chart, you’ll be alerted if a private company is a subsidiary of a public company if that private company has a FRISK® score with an asterisk. Private companies do not have FRISK® scores because of there isn't sufficient information – stock market data, certified financials and bond rating information – to calculate the score. However, if a private company is related to a public company, it will inherit that public company’s FRISK® score.
With this information in hand, you will have the ability to further assess the relationship between the private company in your portfolio and its parent public company. Through the trade contributor platform, you will have access to the public company information at your fingertips. This gives you insight into your true dollar exposure and risk, since public companies often continue to pay on time right up until the point they declare bankruptcy.
As shown below, Milsco Manufacturing Company is the subsidiary of Jason Industries, Inc.:
Determining Whether or Not Any Hidden Slow Payers Lurk in Your Portfolio
If a company is paying you well, chances are you haven’t been worrying about them much. With the Trade Contributor Program, however, you immediately have access to more than $135 billion in trade data that other customers submit on a monthly basis. With the Hidden Slow Payers table, you can see how your financial counterparties are paying others, which could alert you to potential problems in the future. The Hidden Slow Payers tab is useful for both public and private companies, though public companies tend to pay on time. Sometimes, a public company will show up in this table, but this resource is especially valuable when assessing private companies.
If your customer is paying you on time but pays other contributors slowly or, worse, is delinquent, it could signal loss for your company in the long run. The Hidden Slow Payers table juxtaposes your trade data with the trade data of the rest of the users in the database to provide a comprehensive view of that customer’s overall payment trends.
Create Customized Reports on Your Portfolio
One of the most demanding tasks for a risk professional is compiling the available data into a readable format suitable for analysis. With trade contribution, this is done for you. Our customizable reports give you the ability to determine what information you want to include, in an order which works best for your analysis. Layout options include quarterly financials, detail with scores, annual financials and benchmark summary with scores.
Our system compiles all scoring information and your company’s A/R side by side with all other A/R in our database so you have access to the comparative data as well. This information can then be downloaded directly into a .CSV file. In other words, the legwork of creating a comprehensive system for analyzing your financial risk has been done for you.
More Information, Less Work
By using the CreditRiskMonitor Trade Contributor Program, you gain access to a wide range of company information and can create your own customized reports on your accounts. The program helps take the guesswork out of compiling data on your portfolio, helps identify where your largest dollar risks lie and frees up your time so you can focus on the risk that really matters.
CreditRiskMonitor is a financial news and analysis service designed to help professionals stay ahead of public company risk quickly, accurately and cost-effectively. More than 35% of the Fortune 1000, plus thousands more worldwide, rely on our commercial credit reporting and predictive risk analytics for assessing the financial stability of more than 56,000 global public companies.
At the core of CreditRiskMonitor’s service is its 96%-accurate FRISK® score, which is formulated to predict public company bankruptcy risk. One of four key components calculated in the FRISK® score is crowdsourced subscriber activity. This unique system tracks subscribers' patterns of research activity, capturing and aggregating the real-time concerns of what are essentially the key gatekeepers of corporate credit. Other features of CreditRiskMonitor’s service include timely news alerts, the Altman Z”-Score, agency ratings, financial ratios and trends. CreditRiskMonitor’s network of trade contributors provides more than $140 billion in trade data on their counterparties every month, giving them visibility into their biggest dollar risks.