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What is the D&B® Supplier Evaluation Risk Rating?

Question: What is the D&B® Supplier Evaluation Risk Rating?

Answer: The Supplier Evaluation Risk (SER) Rating predicts the likelihood that a supplier may cease business operations or become inactive over the next 12 based on information in the Dun & Bradstreet Data Cloud. Specifically, the SER Rating predicts the likelihood that one of the following events may occur: the company voluntarily or involuntarily goes out of business, the company becomes dormant or inactive, or the company files for bankruptcy. Companies you supply to might look at your SER Rating to help determine the risk of relying on your business for supplies. SER Ratings range from 1 to 9, with the highest number indicating the highest risk of failure. A lower SER Rating may help you win more contracts. If you have a medium- or high-risk rating, you may find it more difficult to break into a supply chain or to work with certain large companies.

 

How is my Supplier Evaluation Risk Rating calculated?

To comprehensively evaluate the potential risk of your business ceasing operations over the next 12 months, the Supplier Evaluation Risk Rating can be calculated using many data points, including but not limited to:

  • Ownership of facilities
  • Company finances
  • Number of employees
  • Region of operation
  • Industry
  • Property owned or rented
  • Number and dollar amount of suits, liens, judgements, and prior bankruptcies
  • Net profit after taxes
  • Most recent PAYDEX Score
  • Total assets and liabilities
  • Number of payment experiences
  • Presence or absence of UCCs and bankruptcy filings
  • Age of business

Several of these factors, such as industry and regional trends, cannot be directly impacted by the performance of your company. With the absence of trade data, the model will rely on demographic factors and internal Dun & Bradstreet proprietary data.

If your Supplier Evaluation Risk Rating has improved, this can indicate that your company is less likely to run into financial difficulties over the next 12 months.

If your Supplier Evaluation Risk Rating has declined, this can indicate that your company is more likely to fall short on its financial obligations over the next 12 months.

What can I do to help ensure that my Supplier Evaluation Risk Rating accurately represents my business?

The SER Rating is based upon data available to Dun & Bradstreet. Ensuring that Dun & Bradstreet has your most recent financial data and all available payment experiences may impact your company’s SER Rating. Keep in mind that many variables go into calculating the SER Rating. You can also confirm that your demographic information and public filings data are all up to date. Additionally, regularly checking your business’s credit file can help you spot potential errors and omissions early on.

Supplier Evaluation Risk Rating payment indications:

  • Approximately 1 of 100 businesses with a SER of 1 will likely face financial stress in the next 12 months
  • Approximately 2 of 100 businesses with a SER of 2 will likely face financial stress in the next 12 months
  • Approximately 3 of 100 businesses with a SER of 3 will likely face financial stress in the next 12 months
  • Approximately 4 of 100 businesses with a SER of 4 will likely face financial stress in the next 12 months
  • Approximately 5 of 100 businesses with a SER of 5 will likely face financial stress in the next 12 months
  • Approximately 8 of 100 businesses with a SER of 6 will likely face financial stress in the next 12 months
  • Approximately 9 of 100 businesses with a SER of 7 will likely face financial stress in the next 12 months
  • Approximately 13 of 100 businesses with a SER of 8 will likely face financial stress in the next 12 months
  • Approximately 21 of 100 businesses with a SER of 9 will likely face financial stress in the next 12 months

 

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