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3 mins read

Portfolio Risk Benchmarking Report FAQs

XYZ Finance

What is the CreditorWatch Portfolio Risk Benchmarking Report?

This report is a short-form risk driver analysis which provides a view of your customer base compared to the national average. It benchmarks lending or credit portfolios against comparable organisations.

The report reveals the creditworthiness of entities in your portfolio, risks related to their locations, how long your customers have been registered businesses, and the types of business entities you’re working with.

It is a critical tool for businesses looking to better understand how their customer portfolio credit risk compares to others, and the steps they need to take to protect revenue and avoid payment defaults.

What does the report measure?

This report measures four key risk dimensions:

Default risk – CreditorWatch’s RiskScore credit rating indicates an entity’s creditworthiness and predicts its likelihood of default in the next 12 months.

Credit RatingRisk CategoryRecommendation
A1, A2, A3Very LowEntity has a very strong aptitude to meet credit commitments. Extend terms within consideration.
B1, B2LowEntity has a strong aptitude to meet credit commitments. Unfavourable economic conditions may lead to a weakened capability to meet financial commitments. Extend terms within consideration.
B3, C1NeutralEntity currently has the aptitude to meet credit commitments. Unfavourable business, financial, or economic conditions may impair ability to meet financial commitments. Extend terms and monitor ongoing payment behaviour.
C2AcceptableEntity has an adequate aptitude to meet credit commitments. Unfavourable business, financial, or economic conditions will likely impair the capacity or willingness to meet financial commitments. Extend terms, and closely monitor ongoing payment behaviour.
C3BorderlineEntity is vulnerable and the aptitude to meet credit commitments is dependent upon favourable business, financial, and economic conditions. Trade with caution, closely monitor and consider your payment terms.
D1, D2, D3HighEntity is currently highly vulnerable. COD trading is highly recommended.
EImpairedEntity is currently highly vulnerable to non-payment and default. Trading eligibility must be considered.
FDefaultEntity has become insolvent or does not have the ability to trade.

Geographic risk – Our Geographic Risk Index/geo-risk metric measures future insolvency risk for 330 regions across Australia, ranking each region from best to worst in terms of potential for businesses in the region to become insolvent.

Business maturity – The age of business is a significant structural driver of default risk. Default rates remain high for businesses less than five years old, with peak default rates occurring between years two and three.

Business type – Type of business entity based on criteria such as private, public, sole trader, GST registration status etc.

Why should a business get a Portfolio Risk Benchmarking Report?

It helps businesses see how risky their portfolio is. It not only helps them understand the risk of their customers, but also their risk on aggregate compared to their competitors.

If a business has extended credit, whether in the form of trade credit or loans, this report will provide an understanding of the default risk of their portfolio in the future.

Another key benefit is being able to compare their risk profile to similar companies within their industry. For example, a non-bank lender would be able to see how their risk profile compares to other non-bank lenders across Australia. Similarly, large banks can compare themselves to other large banks and so on.

What is unique about CreditorWatch’s Portfolio Risk Benchmarking Report?

We are the only credit bureau providing a report like this. We understand the need for such reports as we already do this regularly for some of our biggest clients.

This is different to other reports on market data as it is a bespoke report focusing directly on the customer base of one particular business. While other benchmarking and industry data might tell you about a whole industry, state or region, ours focuses specifically on the customer base of an individual business.

Is the report relevant to businesses in all industries?

This report is for commercial lenders and financiers, and businesses with a turnover of at least $250 million.

It is most relevant to those businesses as we require larger pools of data and larger pools of similar companies to extrapolate meaningful comparisons.

How much does the report cost?

CreditorWatch’s Portfolio Risk Benchmarking Report is completely free.

How can I access the report?

You can request a report here.

How long does it take to receive the report?

Reports will be ready within two business days.

credit credit check credit reports credit risk credit risk management credit score
Michael Pollack
Head of Media & Communications
Michael joined CreditorWatch in July 2021. He has more than 20 years’ experience in business journalism, marketing and communications strategy and digital content development. He is passionate about communicating to the business community how CreditorWatch’s product suite can help them grow and protect their companies.
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