D&B Delinquency Score
Manage Your Cashflow
The D&B Delinquency Score predicts the likelihood that an organisation will pay its bills in a severely delinquent manner over the next 12 months. “Delinquency” is defined as an organisation that, according to Trade Experiences collected by D&B, has paid less than 75% of Trade Experiences within terms and more than 10% paid 90+ days late.
The Delinquency Score identifies the organisations that are likely to pay late and helps our customers to manage their cash flow. Having the cash or liquid resources available to meet daily working capital requirements is fundamental to the survival of all organisations.
Transforming Information into Insight
Factual information is analysed using advanced statistical modelling techniques (including Logistic Regression, Discriminant and Segmentation Analysis) and commercial expertise to identify data characteristics that are common to and most predictive of delinquency. These characteristics are then weighed by significance to form rules for our scorecards that differentiate between organisations with a high risk of delinquency to those with a low risk.
The areas of information used in the D&B Delinquency Score include:
- Trade Experiences collected through the D&B Trade Programme – Businesses regularly provide their experiences of the payment habits of businesses they are trading with. Payment trends and volatility will affect Scores in addition to percentages of prompt or late payments
- Public detrimental information - Such as County Court Judgements (CCJs), mortgages / charges and the legal pre-failure events (administration, receivership, bankruptcy, etc)
- Demographics – Including business age, location, line of business and corporate linkage (especially when there is risk within the group)
- Principals – The principal’s experience and performance of associated businesses
- Financial – Ratios and trends taken from annual and interim accounts. Factors assessed include liquidity, solvency, profitability, debt, late filing and detrimental notes
The D&B Delinquency Score is dynamic, meaning that it is recalculated every time we collect a new piece of information about an organisation, or when information changes. For example, as the age of an organisation increases its risk typically decreases and our Scores will change to reflect this.
Interpreting the D&B Delinquency Score
The D&B Delinquency Score is a relative measure of risk, whereby 1 represents organisations that have the highest probability of delinquency and 100 the lowest. It shows how an organisation’s risk of delinquency compares to other organisations within a country by ordering and segmenting that country’s database into 100 equal percentiles. Each Delinquency Score represents 1% of organisations within that country with the same risk of delinquency. Therefore we can say:
- A score of 25 means a business falls into the bottom 25% of UK organisations
- A score of 64 means that 36% of UK organisations have a lower risk of delinquency. It also means that 64% of UK organisations have the same or higher risk.