Online credit rating system offers early business warning

By Ray Lilley

Friday 6th October 2000

Creditors can now use an online tool to provide an early warning signal of a client's financial worthiness.

The internet-based automated corporate credit rating agency service, first conceived nine years ago by developer and taxation expert Patrick Caragata, offers detailed analysis of company performance and "over-the-horizon" projections of future performance for domestic and international companies.

The service, provided by McCallum Petterson, uses up to 65 key financial indicators to produce an automated credit ranking in just three minutes.

Selected users in the banking and venture capital sectors installed the software-based ratings service to screen investment prospects last December.

The system can also provide national and international clients with a life-cycle performance credit rating, a medium-term rating and a comprehensive 60-page run-down.

"This is not a copy of anything in the [international] marketplace. It's totally new," Dr Caragata said.

Some 10,000 companies were put through the system during beta testing and he said it reliably predicted company strength, health and financial stress across all 22 business sectors checked.

A client company accesses the rating system by the internet, puts in the numbers and receives back an initial three-page report within minutes.

The service will not be competing against international agencies such as Moody's and Standard & Poor's, which deal with only the top 1% of corporates.

"We're going for the mass market and we see a huge opportunity there," Dr Caragata said.

The system can give an early warning of financial distress up to five or even eight years ahead, depending on the quality of the financial data available.

McCallum Petterson monitors the financial performance of state-owned enterprises for the government's business watchdog agency, CCMAU.

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