Company rating : a key indicator of your company’s health
Company rating provides an objective and reliable assessment of a company’s financial health. It is a common point for you, the manager, and your lenders.
The IEDOM is responsible for rating companies in its area of operation on behalf of the Banque de France.
What is the company rating ?
The rating system, defined by the Banque de France, measures a company’s ability to honour its financial commitments over a period of one to three years. It comprises a credit rating and a business rating.
A rating provides an overview of a company’s financial situation in terms of its financial structure, profitability, liquidity, and solvency.
It is determined on the basis of various financial and operational indicators, which are examined by IEDOM’s financial analysts.
The rating is available throug the the Banque de France’s business portal.
Why is the company rating important ?
The rating plays a key role in facilitating your interactions with the financial system.
For your business and financial partners
- It provides an independent evaluation that is aligned with international credit risk assessment standards.
- It helps lenders and investors assess the quality of the financial commitments they are considering, thus improving the lender-borrower dialogue.
- As an external analysis of your financial position, it offers a valuable perspective on your company’s health and its ability to repay debts.
As a tool of monetary policy
- In the context of monetary policy, banks use company ratings as a basis for collateral when requesting refinancing from the Eurosystem. Only companies with strong ratings have their receivables accepted, facilitating access to liquidity under better conditions.
- For banking supervision, the ratings help banks calculate their capital requirements in accordance with solvency regulations. They also enable regulators to assess the quality of banks’ loan portfolios. A strong rating is key to reducing the capital that banks must set aside for risk coverage. This improves their lending capacity and financial stability.
The company rating process
The company rating process involves several key steps to ensure a comprehensive and impartial evaluation :
1 Data collection
IEDOM gathers financial and economic data (balance sheets, income statements, etc.) from companies themselves, commercial court registries, INSEE, credit insurance and surety providers, and various lenders. These data are used to conduct a thorough credit risk assessment prior to assigning a rating. IEDOM receives the tax filings of companies operating in the French overseas territories automatically thanks to a partnership between the DGFIP and the Banque de France.
2Expert analysis
Data collected above a certain revenue threshold is subject to an in-depth review. This review combines quantitative methods (financial ratios, economic trends) and qualitative analysis (corporate governance, market positioning).
IEDOM analysts involved in the rating process must comply with the Code of conduct of rating activities.
3Rating Assignment
Each business entity is assigned a rating, which includes :
- An activity rating, indicated by a letter, which reflects the company’s level of activity (based on turnover) ;
- A credit rating, represented by a number, which places the company on a credit risk scale.
4Communication
The rating is updated at least once a year and is systematically communicated to the businesses concerned. It is also included in the FIBEN database (Fichier Bancaire des Entreprises).
How to read the rating ?
Company rating = Activity rating + Credit rating
| RATING | LEVEL OF ACTIVITY (millions of euros) |
|---|---|
| A | ≥750 |
| B | ≥150 and < à 750 |
| C | ≥ 50 and < à 150 |
| D | ≥ 30 and < à 50 |
| E | ≥ 15 and < à 30 |
| F | ≥ 7,5 and < à 15 |
| G | ≥ 1,5 and < à 7,5 |
| H | ≥ 1,25 and < à 1,5 |
| J | ≥ 0,50 and < à 1,25 |
| k | ≥ 0,25 and < à 0,50 |
| L | ≥ 0,10 and < à 0,25 |
| M | < 0,10 |
| N | No significant |
| X | Turnover unknown or too old (financial year ended more than 23 months ago) |
| 1+ | Excellent ++ |
| 1 | Excellent + |
| 1- | Excellent |
| 2+ | Highly satisfactory ++ |
| 2 | Highly satisfactory + |
| 2- | Highly satisfactory |
| 3+ | Strong ++ |
| 3 | Strong + |
| 3- | Strong |
| 4+ | Good + |
| 4 | Good |
| 4- | Intermediate + |
| 5+ | Intermediate - |
| 5 | Fairly low |
| 5- | Quite low |
| 6+ | Very low |
| 6 | Threatened |
| 6- | Compromised |
| 7 | Very compromised |
| 8 | Highly compromised |
| P | Faulty |
| 0 | 0 No accounting documentation analysed and no adverse information |
Exemples of company rating :
G4+ : A company with an activity level (annual turnover) between €1.5 million and €7.5 million, whose ability to meet its financial commitments over a one- to three-year horizon is considered good+.
C1- : A company with an activity level between €50 million and €150 million, whose ability to meet its financial commitments over a one- to three-year horizon is considered excellent.
Is your company subject to a rating ?
The rating applies to all non-financial companies of an industrial or commercial nature whose head office is located in France or in the French overseas departments and territories.
There are two distinct rating systems :
- For companies with an annual turnover equal to or greater than €1.25 million, the rating – known as the ‘expert assessment’ rating – is based on a thorough evaluation of accounting documents. This approach is not just statistical; it also incorporates qualitative and forward-looking elements provided by the company manager.
- For companies with an annual turnover below €1.25 million, the rating is based on data collected from commercial court registries and the Central Payment Incident Register. Business owners in this category receive personalised support through the SME liaison officer. Visit our page for more information This role is for a VSE-SME Liaison Officer
Raising of the rating threshold
Who can access your company’s rating and how ?
Your company’s rating is strictly confidential and governed by the French Monetary and Financial Code (Article L144-1).
The company director
As the legal representative of the rated company, you have privileged access to this information. It is provided to you free of charge and automatically.}
If you are the legal representative of a legal entity or a sole proprietor, you can consult your rating directly at your local IEDOM office. You can also request a personal meeting with an IEDOM expert to receive a detailed explanation of the reasons behind the assigned rating.
You can access this information at any time via the Espace Dirigeant->https://dirigeant.banque-france.fr/#/] a secure online platform available 24/7. It provides a clear overview of your company’s financial position.
Economic and financial institutions
Banks and other financial institutions that are members of the FIBEN database (Fichier Bancaire des Entreprises) also have access to your rating. However, members are strictly prohibited from disclosing the information contained in this database outside their institution.
What is the manager indicator ?
The manager indicator assesses the risk profile associated with company directors. It is based on public data obtained from commercial court registries.
Indicator Values
- 000 (Neutral) : This is the default value when there is no court ruling or legal decision involving you personally, or any company you have managed.
- 060 (Significant) : You will receive this value if you have been involved in the court-ordered liquidation of a company under your management, or in any other judicial decision affecting you personally.
Communication et use
The manager indicator is communicated to you whenever it differs from 000, or when it returns to the 000 value. Access for FIBEN members, is clearly set out in Article D144-12 of the French Monetary and Financial Code.
FIBEN members may use this indicator when assessing professional credit applications. However, its use is strictly prohibited in the context of personal (non-professional) credit applications. This ensures a clear separation between professional and private spheres.
