In specialist circles, the motto is: Manu­fac­to­ries that have no rela­tion­ship to a house bank are craftsmen. In all other cases where it is a matter of steering a small or medium-sized company through the waves of economic devel­op­ment, there is no getting around a good rela­tion­ship with a house bank. Here, however, it is not only the good rela­tion­ship with the bank’s personal contact that is deci­sive. In case of doubt, the banker, no matter how posi­tive his mood, must also use the company’s ranking for the credit assess­ment when granting a loan. In the end, the credit assess­ment is also deci­sive. Many entre­pre­neurs see the ranking itself as a secret of the bank, a back­drop behind which one cannot look. But the own ranking can be controlled.

What exactly is weighted with ratings?

Rating means to eval­uate, assess, rate or clas­sify. Ratings are used to assess the cred­it­wor­thi­ness of a customer. In contrast to the previous credit assess­ment, which was essen­tially based on the annual finan­cial state­ments prepared in accor­dance with commer­cial law and was there­fore oriented towards the past, the ratings now used must deter­mine the future viability of a company.

The credit rating there­fore provides infor­ma­tion on the extent to which the company will be able to meet its oblig­a­tions in the future. The rating thus indi­rectly deter­mines which risk premium the lender will demand and whether lending is possible at all. The infor­ma­tion processed in a rating is of a quan­ti­ta­tive nature (company figures) on the one hand, and qual­i­ta­tive state­ments on the other, e.g. on markets, compet­i­tive struc­ture, organ­i­sa­tion, corpo­rate processes, planning/control or corpo­rate manage­ment.


The instru­ment of rating itself is a math­e­mat­ical-statis­tical model in which indi­vidual company char­ac­ter­is­tics that have been indi­vid­u­ally or collec­tively iden­ti­fied as rele­vant to default are condensed into a rating grade. This rating grade is linked to a prob­a­bility that the company will become insol­vent in the future and will there­fore no longer be able to meet its finan­cial oblig­a­tions. In future, the banks’ pricing policy will be geared even more strongly than before to the risk content of the indi­vidual trans­ac­tion. However, not only the rating note plays a role here, but also the collat­er­al­i­sa­tion of the loan and — albeit to a much lesser extent — the matu­rity and repay­ment modality. For example, a “weaker” rating can be compen­sated by better collat­er­al­i­sa­tion.

Who can create a rating?

In general, there are two different ways to create a rating. The internal rating is created by banks and savings banks and flows into the credit rating. The external rating is created by rating agen­cies. The largest and best-known external rating agen­cies are Moody´s, Fitch and Stan­dard & Poors.

These two rating proce­dures are very different. External rating agen­cies eval­uate criteria that they can derive from manda­tory publi­ca­tions of key company figures. This results in economic infor­ma­tion that provides infor­ma­tion about the cred­it­wor­thi­ness of a company. In the case of an internal rating conducted by a bank or savings bank, other so-called “soft criteria” are also used.

Which indi­vidual criteria are impor­tant for a rating?

The analysis of the company’s annual finan­cial state­ments weighs approx­i­mately 50%. In this annual accounts analysis, the equity base and earn­ings situ­a­tion are of major impor­tance. In addi­tion, liquidity is very impor­tant for future-oriented divi­sions. From indi­vidual items in the annual finan­cial state­ments, combined with account manage­ment data (in partic­ular account over­drafts), it is derived whether the liquidity of a company is good or strained and how it develops over time. The devel­op­ment of liquidity allows a quite good fore­cast of the future solvency of a company and is there­fore included in the rating with a high weight.

In addi­tion to annual accounts analysis and liquidity devel­op­ment, qual­i­ta­tive company char­ac­ter­is­tics are also taken into account. These are char­ac­ter­is­tics that enable a state­ment to be made about how care­fully a company conducts its busi­ness according to plan and commer­cially, how well trained and expe­ri­enced its manage­ment is and how well the company performs in compar­ison with other market partic­i­pants. It is partic­u­larly impor­tant, for example, whether the company has a func­tioning dunning system or whether profes­sional and forward-looking liquidity plan­ning is carried out. Open, pro-active commu­ni­ca­tion with the bank and profes­sion­ally prepared infor­ma­tion about the company are also impor­tant levers in this regard.

In the rating of corpo­rate customers (turnover figures from 2.5 million EURO) there are smooth tran­si­tions in the weighting of key figures within the balance sheet rating. If, for example, the cred­itor term is still an impor­tant indi­cator for smaller compa­nies, it loses weight with increasing company size. However, the storage period and stock key figure become more impor­tant as the size of the company increases.

In order to have a posi­tive influ­ence on cred­it­wor­thi­ness and rating, an as-is analysis should first be carried out within the company.

Such an actual assess­ment is carried out in the form of an analysis and covers all areas of the company that are consid­ered for an assess­ment. Of course, manu­fac­turing compa­nies differ from service providers and free­lancers. Larger manu­fac­to­ries have the corre­sponding depart­ments that can carry out such an analysis. Small manu­fac­to­ries should use financing and promo­tion advice.

The most impor­tant points with which a small or medium-sized manu­fac­tory can posi­tively influ­ence its rating result can be enumer­ated as follows:

  • Strength­ening equity capital and improving earn­ings
  • Liquidity plan­ning and agreed account manage­ment
  • Intro­duc­tion or opti­mi­sa­tion of busi­ness manage­ment instru­ments in the company (e.g. plan­ning instru­ments, accounts receiv­able).
  • Active commu­ni­ca­tion with the bank
  • Profes­sional corpo­rate docu­ments

All in all, it can be said that planned, struc­tured action is a success factor for compa­nies. The fact that sales, earn­ings and liquidity are planned is more impor­tant than the way this is done. It is up to each entre­pre­neur to use “his” method. What advan­tages does the rating have for your company?

Rating has an impor­tant feed­back func­tion for entre­pre­neurs. Through the rating you as an entre­pre­neur will find out which fields of action are consid­ered to be well covered and where there is still room for improve­ment. In the case of a rating that does not turn out so well, the conse­quences for the company are initially not pleasant, but here the manu­fac­tory is made aware of its need for action in an initially less “painful” way.

In the best case scenario, the rating will trigger actions that will improve future viability of the manu­fac­tory. The primary goal will be to improve the rating. At the same time, the actions will also opti­mize the entre­pre­neurial processes and improve the long-term perspec­tive of the company. Beyond this action-trig­gering effect, the rating will make an impor­tant contri­bu­tion to strength­ening the stability of compa­nies.


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