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Commercial Credit Reporting

International Committee on Credit Reporting Meeting Carlos Fernández Iñigo (Deputy General Manager)

Madrid, September 30 2013

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Index

1. Who are we?

2. Why a credit information provider is needed?

3. Commercial Credit brief history

4. Commercial Credit in Spain. Impact

5. Credit information. What is it used for?

6. Credit information. Basic design and main gaps

7. Credit information. A world wide view

Who are we?

INFORMA D&B is the company from Grupo

CESCE leader in the supply of Commercial,

Financial and Marketing Information both at

domestic and international level, on companies and

businessmen, in order to increase clients' and

suppliers' knowledge and minimize business risk.

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1. Who are we?

2. Why a credit information provider

is needed?

3. Is this something new?






5

Why a credit information provider is needed?

needs

needs

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1. Who are we?







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Is this something new? Let’s make history…

• In old days:

• Business were only done in closed environments

• Only with known people

• However, Roman legislation creates insolvency proceedings and

punishment rules in case of non-payments

• Middle Age:

• Business were very fair driven (Regulation on the transactions inside fairs,

were very strict).

• However, all relationship were based on confidence and past experiences

• Banks began their activity as a payment guarantee

• First public lists of insolvency creators (bonnet vert-green hat)

Commercial Credit brief history

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XV century brings the need to use courier (written media) to transfer

knowledge, specially overseas

XVIII century comes with the creation of commercial guides (1795 the first

Spanish one), what we could consider as the first example of today’s

directories

XIX century sees the creation of the first information agencies (our “mother

companies”)


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D&B Case

• 1841 The Mercantile Agency

• The Agency is established “for the purpose of procuring by resident and special

agents, information respecting the standing, responsibility of country

merchant’s”…

“to ascertain whether persons applying for credit are worthy of the same and to

what extent”

• 4 US Presidents have worked for the company

• Iberian subsidiary (INFORMA) is 110 years old in Spain and 107 years old in

Portugal


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Since credit began, creditors have always wished to recover their credit.

This need has had several consequences:

• The law has adapted itself to the new conditions by creating new requirements

and penalties.

• New recovery mechanisms have been created in legal proceedings

• Little by little, the legislation has forced the anticipation of the delay in payment

situations

• New research methodologies have been created in order to know whom to enter

in a relationship with.

• In these last years, risk predicting mathematical models have been created in

order to be used before entering on a business relationship with the creditors.


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“La nouveauté se fait par arrangements inédits des

choses anciennes”

Jacques Monod


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1. Who are we?







13

Commercial Credit in Spain. Impact

Source: Bank of Spain

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Source: INFORMA

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Source: INFORMA

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Source: INFORMA

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Source: INFORMA

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Source: INFORMA

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1. Who are we?







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Which is the relationship between our customers and the companies they

are consulting the report from?

→ In a normal day in the web, they declare that:

25,0%

1,5%

15,2%

12,4%

15,6%

29,8% Other usage

Prospects

My own company

Competitors

Suppliers

Customers

Credit Information. What is it used for?

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Big Companies

Small Companies

A few B2B

Customers

Many B2B

Customers

They are sporadic users, where the Risk

Manager is also the Company’s Manager.

They are usually Internet Customers

(eInforma). Customers often make their

decisions based on the content of the

report.

Since they are small Companies, we can

assume that the B2B invoice is small in

each case. So, normally they are flat-rate

Customers. They base their decisions in the

Scoring value of the reports.

There is a Credit Management department,

so they require a specialised commercial

contact. They base their decisions in

commercial experience (Consumer Credit).

They require solutions based on information

with a strong monitoring component.

Customers with specialised and professionalised

management. They require complex solutions based not

only in commercial information but also in additional

products (Credit Insurance Policies). Such Clients often

generates decision-making systems in which the existing

information in the company is essential. They require

systems that integrate public sources’ data with their own

internal systems’ data.


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Database Data

Companies

Sectorial analysis

Economical studies

Strategic decisions

Commercial credit

Prospects

Suppliers

Compliance


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Find and gain knowledge about companies and

their managers.

Classify new clients.

Stay informed at all times on the situation and

evolution of clients, suppliers and prospects.

Study credit levels and payment delays.

Ascertain the purchase potential of your clients.

Know your suppliers.

Study the competition´s positioning


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1. Who are we?







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Our information can be seen in 4 main pillars and one component:

Social

Network

1

Characteristics 2

Financials 3

Past experience 4

A N A L Y T I C S

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Credit Information. Basic design and main gaps

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How good is Spanish information in order to fill these blocks?

1 2 3 4 5

Mercantile Societies (S.A-S.L.) Good Very Good

Very Good

Good Good

Sole Proprietors and Rest of Legal Entities

Non Existing

Medium Non

Existing

Poor and

Risky

Based on Consumer

Credit Proxies


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Main information gaps

1 2 3 4

Mercantile Societies (S.A-S.L.) More linkages

in Public Repositories

More Public Sources (Social Security)

Activity/Inactivity

indicators

Timing

More information (ever positive)

Public Administration

Is reducing its publications

Sole Proprietors and Rest of Legal Entities

Ownership disclosure

Good universe Basic

figures Access to Credit

Bureau Files


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Where does our information come from?

Known

Public

Sources

Information created

by the own company

Information

created by others

Database

Main Challenges

•Accuracy

•Different information timings

•Entity matching

•Inputs #2, and specially #3, are growing

exponentially with different sources and

formats

2

1

3


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Data Quality Pyramid

Treatment of the data by an Analyst

Direct and accurate treatment of the information

Automated rules of data-cross checking


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BORME PRENSA D. CUENTAS BOP BOE

Public Sources


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Public Sources

BORME:

Daily Update

OCR recognition and manual treatment

Online availability in the same publication date.

1,7 MM events per year

BOP, BOE…:

Legal eventes capture.

17.000 Bulletins per year, 90.000 events/month

OCR recognition and manual treatment.

Daily update

Press:

National, economical, regional, specialized media

Daily Update

Monthly average:5.200 entries


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Our national database

6 million Spanish economic agents.

3.3 million companies and active sole

proprietors with rating

More than 11.4 million administrators.

More than 10 million companies' balance

sheets.

More than 2.4 million companies with corporate

links.


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1. Who are we?







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Credit Information. A world wide view

EUROPE:

93.250.407

ASIA and OCEANIA:

38.080.024

MIDDLE EAST:

1.454.148

AFRICA:

2.649.517

NORTH AMERICA:

71.571.190

SOUTH AMERICA:

19.332.504

TOTAL

226.337.790 companies

INFORMA D&B is Dun&Bradstreet International's partner for the Iberian

Peninsula, forming part of the D&B Worldwide Network.

Companies from all over the world are identified by a D-U-N-S® number.

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As a network, we are uniquely positioned to look at data in

entirely new ways for important insights that drive action

Traditional Data and

capabilities

Linkage

Trade

Financials Company

Data

Web

Reports

Scores &

Indices

Data sets

Emerging Capabilities and

Concepts

CMA/LMA

Malfeasance

Transparency

People in Context

Velocity of Change

Behavior vs. Buzz

Virtual Organizations

???

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INFORMA and D&B have crafted a data, insight and analytics

roadmap with a focus on providing customers with actionable insights

De

pth

of

Dat

a an

d C

ust

om

er

Val

ue

We see this as a mean to shift from insight…to actionable foresight

Company Coverage

Company Insight

New / Enhanced Standard Scores

Customized Analytics

Proprietary solutions tailored to an Environment

Individual Customer’s

Custom Analytics

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Associations

Customer Service

[email protected]

+34 902 178 078

Business information

www.informa.es

You could find us

at:

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Appendix 1

Fuentes estratégicas solicitadas a ASEDIE

NUEVAS UTILIDAD

1. Sede electrónica y Tablones Edíctales Análisis de solvencia , modelización herramientas Rating, Scoring

2. DNI Órganos Sociales Transparencia y correcta relación de los Órganos Sociales en distintas empresas

3. CMT equiparando al listado telefónico Ficheros de Marketing, Geomarketing, direcciones y actividades

4. TGSS seleccionadas las siguientes 5 BBDD • Censo Global de Cooperativas • ERES • Empresas y empresarios inscritos en la TGSS • Nº de trabajadores por empresa, centro de

trabajo y movimientos • Empresas con pagos pendientes con la TGSS

Análisis de solvencia, modelización herramientas de Rating, Scoring Actualización del Censo Análisis de solvencia empresarial Indicador de actividad, prevención de fraude Análisis evolución de empleo Análisis de solvencia, modelización herramientas de Rating, Scoring

5. AEAT • Censos de NIF’s de empresas y empresarios con

datos de contacto asociados y domicilio fiscal • Censo de NIF’s de empresas y empresarios que

realizan declaración de IVA (mod. 390) • Declaraciones mensuales y trimestrales de IVA

empresas y autónomos incrementales y con carga masiva

• Empresas con operaciones de comercio exterior y sus movimientos

• Empresas con pagos pendientes con la AEAT. Sede electrónica y Tablones

Actualización del censo Indicador de actividad, prevención de fraude Indicador de actividad, prevención de fraude Ficheros de marketing, productos y servicios de empresas Indicador de actividad, prevención de fraude

6. Ministerio de Justicia “BBDD y actualizaciones incrementales de la información pre concursal de los distintos Juzgados Mercantiles de territorio Nacional “

Actualización situaciones concursales, riesgo, morosidad, fracaso empresarial, sistemas de evaluación, Rating, Scorings

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Appendix 2

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Apendix III INFORMA’S main facts

57 Sales volume and sales

-10.000.000 €

0 €

10.000.000 €

20.000.000 €

30.000.000 €

40.000.000 €

50.000.000 €

60.000.000 €

70.000.000 €

80.000.000 €

90.000.000 €

100.000.000 €

Ventas consolidadas Ventas Beneficio de Explotación

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INFORMA D&B's philosophy is summarized in five corporate values:

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of the

Ibex-35 companies

of the

Financial entities

more than

85%

more than

95%

Sector of

activity Electricity Chemical and Pharmaceutical Telecommunications Construction Services

Percentage

of the Top 25 72% 68% 60% 60% 56%

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