VFD Transparent logo

VFD Articles

A horror story you can help your clients avoid with a little bit of prior planning and provided you know how to help them.

We all know some suppliers routinely check credit ratings before agreeing credit arrangements, this includes the Utilities sector.

We also know business utility costs are going up by 100% to 200%, so a company who paid £30,000 for their utilities last year, will need to budget an additional £30,000 and £60,000 for next year.

Are your clients aware of this because it could be worse, much worse…

Now consider the situation: Without your client knowing their credit rating is likely to have been downgraded, this may not impact them immediately, so they are likely to be totally unaware.

When the time comes to renew your client’s contract, their utilities supplier is likely to conduct a credit search and conclude they are not a safe risk, and if that happens your client potentially has a MAJOR PROBLEM…

Most of the major Utility Companies will demand a 6-month deposit,
payable in advance and held in Escrow until the end of the contract.

If your client’s bill for utilities is likely to be £90,000 next year, they will potentially need to find an additional £45,000 to pay the deposit, and that is on top of the higher bills… Ouch!

What happens if your client cannot immediately lay their hands on that much money, what are their options, they can’t continue in business without power…

To raise the money needed to pay the deposit, your client is likely to need to borrow, but the only reason they are in this position in the first place is because their credit rating is poor, so they are likely to find it hard to borrow, or at best they will need to put up security, give personal guarantees and probably accept adverse terms… which could be catastrophic, but don’t panic because you can help.

What most business owners, and to be fair, most accountants don’t know, is this:

  • You can find out in advance what you client’s credit rating is across all of the major credit ratings agencies


  • You can frequently take rapid action to correct your clients credit rating if necessary

The Credit Rating Agencies always look at the worst-case scenario, but if you know what you are doing, (or know someone who does), this potentially catastrophic situation can re avoided with a bit of preparation.

Anyone using the new VFD Pro Client discussion Model will know all about Credit Lightbulb. They can do two things that are invaluable:

  1. Provide you and your client with a Credit Report showing how they are rated by ALL of the main credit reference agencies – and right now, a lot of your clients have been or are about to see their credit rating drastically downgraded*.
  2. If your client has had their credit rating downgraded, by engaging Lightbulb Credits services you can almost certainly get the Credit Reference Agencies to revise the rating upward, which if done in good time, could avoid an awful lot of unnecessary heartache.

*Many businesses had their turnover and profit significantly impacted by the various Covid lockdowns and related disruption. Many have taken on more debt and have sums outstanding to HMRC, as business understandably took advantage of the Covid support that was available. What is probably less obvious is that when the company accounts are filed, these changes are picked up by the Credit Rating agencies resulting in potentially significant reductions in Credit Ratings and some extremely unpleasant and unexpected ramifications.

Click here… to find out more about Lightbulb Credit and how Accountants are using their services in conjunction with VFD Pro’s Client Discussion Model to highlight when credit rating might be at risk.