By Claire West
Euler Hermes, the UK’s largest credit insurer, is urging UK companies to consider how they plan to release their 2009 company accounts which will inevitably give a picture of company performance at the depth of the recession, and may impact future credit.
September represents the looming deadline for limited companies, with a 31st December financial year end, to file their accounts with Companies House.
Whilst Euler Hermes employs regional risk analysts to obtain up-to-date information that is not publicly available from companies on which to base its underwriting decisions, most credit ratings agencies and other credit insurers do not, and only reference filed accounts, Kris Macauley, Head of Risk Information for Euler Hermes UK explains:
“As the economy has emerged from the recession we would hope to see a recovery in the health of UK businesses,” he says. “However, 2009 audited accounts being filed now will in many cases tell a very different story — possibly one of declining profits or losses - and this is unfortunately what many companies will be judged on in terms of their credit rating.”
Euler Hermes UK has long been campaigning for businesses to be more transparent in order to help credit insurance policyholders (and the companies themselves) but as the economy recovers and business performance with it, Mr Macauley expects to see more engagement from businesses who will want to share a more meaningful picture of their up-to-date financial position.
“Where end of year accounts play such a crucial role in credit ratings decisions,” he says, “companies should be aware of the impact they can have.
If businesses feel the ‘recession-era’ information they are publishing in Companies House will reflect negatively on them, and they have a better story to tell, I can only urge them to be more transparent and open in their dealings with their suppliers and the credit insurers to ensure their lines of credit remain open.”