Business News

Mon Nov 9

CreditorWatch launches RiskScore to guide businesses through treacherous waters

Written by Media Release

At a time when it's never been more critical for businesses to have confidence in their trading relationships, leading digital credit reporting bureau, CreditorWatch, has launched ‘CreditorWatch RiskScore’ to provide businesses with trustworthy and transparent insights into their trading partners' creditworthiness.

The tool will enable creditors to understand the probability of businesses likely to default in the next twelve months, protecting them against the increasing number of Australian companies that are making delayed payments. This is a key indicator of business cash flow, with CreditorWatch’s latest data showing that payment times are up 222 percent year-on-year nationally.

The COVID pandemic has diminished many of the traditional indicators of creditworthiness. Banks are permitting firms to defer payments, government stimulus is creating artificial market liquidity, while creditors are cutting customers slack on late payments. This is making the threat of onboarding badly performing customers even higher and, for small and medium-sized businesses in particular, the loss of goods and services would be a hammer blow to livelihoods.

Built in partnership with Open Analytics and using sophisticated machine learning to analyse nine million tradelines, this new model is the most predictive and insightful risk score in the market. It

ranks entities based on their riskiness with one of 14 credit ratings (from A1 to F) and a numerical score from 0-850. The higher the score, the lower risk the entity poses.

While other models use a limited range of indicators to predict default, CreditorWatch RiskScore analyses factors such as trade payment data, business demographic and geographic risk to rank entities based on their riskiness. This provides a transparent and reliable score for business owners to see the likelihood of failure of potential partners, plotted against the industry average. It also

Patrick Coghlan, CEO, CreditorWatch says: “Traditional credit scoring methods are simply inadequate and for many firms, onboarding one failing business can have a massive impact on their livelihood. CreditorWatch has unique access to public and private data sources, including tradeline behavioural data, text mining and business demographic risk factors, to provide insights that can’t be found by any other credit bureau. As our national economic picture becomes ever more complicated, RiskScore will ensure great businesses are not taken down by failing customers.”

CreditorWatch’s data suggests that increased government support while safeguarding jobs has created hundreds of ‘zombie companies’ that do not otherwise have the cashflow to stand on their own two feet. As these measures are wound back in early 2021, it’s crucial that business owners do not provide goods and services to customers that will not be able to pay them back.

James O'Donnell, founder, Open Analytics says: “A really important component of RiskScore is CreditorWatch's trade payment data. This encompasses business-to-business transactions, including information about trading volumes and late payments behaviour, which is very predictive information when it comes to future defaults. It’s never seen before in the industry and will revolutionise the traditional credit scoring process.”

For more information, access the CreditorWatch white paper here and RiskScore brochure here.

Tue Nov 3

AUSSIES LOVE FOR LOCAL SPENDING REIGNITED

Written by Media Release

Whether it’s a takeaway pint from the local pub or trying a new barista, the lockdown has reignited Australia’s love for shopping locally. Takeaway shops (34 percent), cafes (31 percent), restaurants (30 percent) and bakeries (29 percent) are among those who have had the biggest bounce since lockdown, according to research commissioned by Mastercard.

Despite three quarters (76 percent) of Australians being mindful of their spending during the initial COVID-19 lockdown period and more than half (56 percent) not really knowing anything about their local businesses, 73 percent are wanting to actively spend in the local community to help them bounce back and recover. In fact, 42 percent are so committed to helping the locals stay afloat they’ve spent more money on a product or service in the local community despite knowing they could have found it cheaper elsewhere.

The research also suggests that the shift to shopping local has made Australians feel more connected with the community. More than one in three (69 percent) said they feel a greater sense of community spirit now than prior to lockdown, while 68 percent are more inclined to spend at their local shops.

From popping in to say hello (51 percent) to knowing the name of their local business owner (25 percent), more than two in five respondents (41 percent) have made the effort to spend time with and support their local, as they feel they make a positive difference to the community.

As Australians adjust to a new way of life, 67 percent pledged to continue showing their support to local businesses with 91 percent claiming they are now spending up to $200 per week on their local high street. This promise of ongoing support is particularly apparent when it comes to one of Australia’s favourite pastimes – dining out, with 54 percent committed to eating and drinking locally in future.

“Recent times have changed the way people spend, with Australians rallying together to support their local businesses,” said Aaron Fidler, Vice President, Retail Account Management, Mastercard Australia. “As the research shows, people have turned to trusted staples within their local communities, which has not only helped the bounce back of local shops, it has brought about a greater sense of community spirit.”

TOP FIVE LOCAL BUSINESSES AUSTRALIANS ARE KEEN TO SUPPORT

Local takeaway shops (34 percent)
Local cafes (31 percent)
Local restaurants (30 percent)
Local bakeries (29 percent)
Local butchers (26 percent)

While Australia is known as a nation of foodies, the states differed slightly on where they are showing their love for local. With Melbournians often claiming the crown for being the coffee capital of Australia, it’s perhaps no surprise that local cafes led the post-lockdown bounce back in Victoria (39 per cent – 5 per cent more than any other state). Elsewhere, West Australians turned to the tools with a visit to their local DIY or hardware store (22 percent) while Tasmanians sought after self-care, paying a visit to their local barber, hairdresser or beauty salon (23 percent).

As part of its ongoing commitment to support Australian small businesses, Mastercard recently launched its Getting Back to Small Business program, connecting organisations to a range of free digital resources, tools and services to help them navigate and adapt to the new demands of online commerce. For more information on Getting Back to Small Business, visit mastercard.com.au/backtobiz.

Methodology
On behalf of Mastercard, PureProfile commissioned an online survey of more than 1,000 Australians nationwide. The research explored the common areas where Australians are spending and their intentions to continue shopping locally following the lockdown period.

About Mastercard (NYSE: MA), www.mastercard.com
Mastercard is a global technology company in the payments industry. Our mission is to connect and power an inclusive, digital economy that benefits everyone, everywhere by making transactions safe, simple, smart and accessible. Using secure data and networks, partnerships and passion, our innovations and solutions help individuals, financial institutions, governments and businesses realize their greatest potential. Our decency quotient, or DQ, drives our culture and everything we do inside and outside of our company. With connections across more than 210 countries and territories, we are building a sustainable world that unlocks priceless possibilities for all. Follow us on Twitter @MastercardAP, join the discussion on the Beyond the Transaction Blog and subscribe for the latest news on the Engagement Bureau.