The Company Watch Credit Limit®️ is a benchmark unsecured trade limit that could be used as a starting point when considering the amount of credit that should be extended to this company by a single supplier of goods, services or finance.
The Credit Limit is only a benchmark guide (not a rigid specification) and a supplier should always carry out additional research, particularly when considering extending credit in respect of relatively larger sums and/or extending credit to companies in the Warning Area.
The calculation gives consideration to the company’s size, level of trading activity, the degree to which it is already exposed short term to its creditors, its ability to repay them and its working capital position. It uses the H-Score®, cash flow measures and the PoD®. It also takes into account the number and value of any County Court Judgments recently served against the company and the period of time for which the company has been trading.
The Credit Limit assumes average circumstances, for example a 60-day period before payment is received. It has not been specifically customised, nor does it address a supplier’s own circumstances such as its ability to bear losses, its profit margins and its appetite for risk.
The Credit Limit displayed is the lowest of the current company’s Credit Limit and the top UK consolidated parent. Maximum Credit Limit is capped at GBP 50m.
The Credit Limit is not calculated in the some circumstances. There is a Knowledgebase article providing more details on this.
