Creditsafe Launches COVID-19 Impact Score to Help Identify Portfolio Risk
APR 10, 2020 - 6:30 am
Knowing that business uncertainty is at unprecedented levels, Creditsafe USA challenged its expert team of data scientists to aid businesses understandably concerned and uneasy. By analyzing over 40 million U.S. companies, Creditsafe created the COVID-19 Impact Score which is designed to help businesses identify risk areas within their customer and supply chain portfolios. To maximize the benefit of the initiative, they have made this resource available for free to every U.S. business.
The Impact Score was developed using a combination of macro and micro economic indicators, federal, state and local data, combined with real-time payment and other information. The Creditsafe COVID-19 Impact Score grades the likely disruption to any business on a simple scale ranging from A – very low risk of disruption through to E – very high risk of catastrophic disruption. Creditsafe’s analysis of the nation shows that almost 30% of U.S. companies are likely to face considerable disruption within the next 90 days.
The Impact Score differs from Creditsafe’s core risk score, which predicts the likelihood of bankruptcy or severe delinquency in the next 12 months and should be used as an additional guidance indicator in these difficult times.
“Credit managers and other financial professionals can use this data to identify risk areas within their portfolios quickly,” said Matthew Debbage, CEO of Creditsafe USA. “To give just one interesting example, it’s well known that airlines are struggling right now however, our analysis is showing that charter flights are in high demand and are not likely to be nearly as impacted.”
Debbage was also quick to emphasize how the Creditsafe COVID-19 Impact Score should be used by businesses. “It’s imperative to recognize that this score should be used alongside our existing core risk score as a supplementary tool,” he explained. “Although we are in unique times, they do not overwrite the fundamentals of business and our experience through previous crises shows that our underlying prediction model remains a solid foundation for making business decisions. We have very deliberately not made any rash moves to rewrite our core score and are thereby continuing to support those strong companies that will be helping to rebuild our economy when this is all over, while also providing a valuable guide as to the virus’s potential effect.”
Commercial lenders will face many new and unique challenges over the coming months as the full effects of the coronavirus pandemic are felt throughout the economy. For commercial customers, cash flow, liquidity and credit tightening dramatically across industries is the... read more
What happens when it’s time to wind down your broker business and prepare for retirement? Bud Callahan walks through the steps to consider while making the decision and shares the wisdom he has learned from his exit journey. Many of... read more