Press Release

KEEP A GOOD CREDIT RATING TO FEND OFF THE CREDIT CRUNCH

Equifax offers SMEs advice on managing business finances to minimise risk

London, 1st August 2008 - The economic downturn is taking its toll on businesses as leading business information provider, Equifax, reports a 10% increase in business failures in Quarter 2 of 2008, compared to the same period last year. With the Department for Business, Enterprise and Regulatory Reform (BERR) reporting that a record number of new businesses started up in the 12 months up to the beginning of 2008, Equifax believes that it is more crucial than ever that SMEs, and especially sole traders and partnerships, focus on maintaining a good credit rating. Equifax is, therefore, offering advice to SMEs on how to manage their finances through the credit crunch.

"New lines of credit are already harder to find as both lenders and other businesses become increasingly selective about who they do business with" confirmed Nic Beishon, Head of Commercial Solutions for Equifax. "This means all types of business - from the one man bands through to the larger limited companies - need to keep a close eye on their own financial status as well as that of both prospective customers and suppliers. In our most recent Business Failures Report we saw a 5.8% increase in the number of failed businesses with a zero credit limit. Any company checking on these organisations in the lead up to their insolvency would have seen this zero rating, providing them with an important warning to only trade based on receiving upfront payments.

"In this tough economic climate SMEs are the most vulnerable. It's crucial, therefore, that they do everything possible to ensure their own credit rating is kept as positive as possible - and this means making sure that none of their customers fall behind with payments. It only takes one customer going under to turn their own financial fortunes.

"We also believe it's important that suppliers are checked and monitored on an on-going basis too, in order for companies to ensure they have a good source of raw materials and services to support their own business. This factor often gets overlooked, yet it can have a huge impact on an already struggling business."

Equifax is urging firms to take steps to manage their finances and minimise the risks. In particular the company is encouraging businesses to make initial checks on the financial status of prospective customers and suppliers and to set up on-going monitoring of the key customers and suppliers to ensure that they are aware of any significant changes that might affect their own fortunes. In addition, Equifax recommends that companies obtain a copy of their own Business Report to make sure that they look their best for prospective suppliers and customers.

Beishon concludes, "We advise businesses to look at their own finances, as well as monitoring their customers. Not only should this help them to avoid the risk of their customers failing, but it will also ensure their credit lines remain open to secure the future of their business.'

EQUIFAX'S GUIDE TO MAINTAIN A GOOD BUSINESS CREDIT SCORE AND A LOW RISK PROFILE

Pay bills on time, as businesses will be looking for early signs of difficulty
Monitor your own business credit profile
File accounts on time, as any delays looks like you may have something to hide
Avoid County Court Judgments, as any firm monitoring your status will view this as an early sign of financial trouble
Conduct credit checks on all new accounts
Implement data sharing systems to monitor customers for signs of financial stress
Look for early warning signs, such as prompt payers suddenly falling behind on payments
If you suspect a customer or supplier is in trouble, run a credit check and reassess your relationship if necessary
Set strict deadlines on accounts that are continually overdue. Don't let unpaid invoices mount up
Conduct ongoing monitoring of all customers and key suppliers. Equifax Portfolio Monitoring helps businesses quickly identify potential bad debt and act quickly to prevent it
Beware customers who switch to new suppliers at the point they reach their credit limit with you. This is often a sign of problems looming.

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For further press information please contact: Wendy Harrison, Cecile Stearn, Margot Tomkinson or Jenny Staniforth at HSL on 020 8977 9132 / Fax: 020 8977 5200 or Email: wendy@harrisonsadler.com