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Spending Transparency:
With Compliance, Comes Opportunity
With the passage of the Federal Funding Accountability and Transparency Act of 2006, spend transparency became a requirement for Federal agencies. A second phase of the legislation underway is promising more agency details, contracts and technical improvements. The trend of transparency in government spending - how it spends nearly $1 trillion every year on grants, contracts and awards - is now becoming best practice.
State governments have been quick to adopt the Federal approach. Five states passed legislation mandating the creation of government expenditures websites in 2007, while Governors Mark Sanford® of South Carolina and Matt Blunt® of Missouri issued executive orders to that effect. Four states - Louisiana, Mississippi, Utah, and Washington - have already passed and signed spending transparency legislation this year. In Georgia and Maryland, similar bills are awaiting the governor's signatures. So is spending transparency just about compliance? It doesn't have to be. Agency efforts to consolidate their data are significant. But there are also extraordinary ancillary benefits that become available to the agency when this effort is completed - from efficiencies, savings to risk management.In fact, many agencies are already taking advantage of their data collection efforts to gain powerful analytics about their suppliers... such as, who is:
- Linked to a corporate family
- Foreign owned
- Experiencing financial stress... negatively impacting your supply chain
- Debarred from doing business with the U.S. Government
- Associated with past criminal activity
- Considered a small business
- Displaying patterns of misrepresentation or fraud
No matter whether you approach this analysis manually or with the help of online tools, take advantage of this powerful information resource driven by regulation. To find out more about available analyses or tools, contact us.
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Interpreting D&B scores can be easy - even if you are not a financial analyst Ever wonder how best to use D&B's PAYDEX score to evaluate business partners? Ever think whether its best to use D&B's Financial Stress Score (FSS) or D&B's Commercial Credit Score (CSS) in your evaluations? Ever ask yourself how to best use the key business ratios or industry norms? D&B reports have a wealth of financial information and are extremely helpful if you understand how to use them.The D&B PAYDEX Score is a unique, dollar weighted indicator of payment performance based on payment experiences as reported to D&B by 3rd party trade references. PAYDEX Score helps to assess the strength of an entity's cash flow which may indicate financial strength or inability to deliver goods. PAYDEX Score ranges from 20 - 100. A score of 80-100 indicates prompt payments. A score below 50 signals caution and is an indication of weak cash flow. Knowing an entity is 30 days or more beyond terms, may be critical if you are evaluating suppliers or investigating potentially fraudulent behavior.
The Financial Stress Score (FSS) is more relevant to agencies than the Commercial Credit Score (CCS) which is used to predict payment habits. The Financial Stress Score is most helpful as you evaluate business partners since it predicts the incidence of Financial Stress for suppliers, loan or grant recipients. More specifically, FSS predicts the likelihood of a firm ceasing business without paying all creditors in full, or reorganizing or obtaining relief from creditors under state/federal law over the next twelve months. D&B's Supplier Evaluation Rating (SER) is derived from the Financial Stress Score and can also be used to evaluate suppliers. The Financial Stress Score ranges from 1-5, with 5 being a leading indicator of an entity likely to cease operations within the year.
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Financial Stress Score
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Financial Stress Class
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Incidence of
Financial Stress
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1
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0.49%
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2
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1.37%
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3
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3.73%
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4
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8.30%
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5
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35.80%
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Another timesaver for government agencies are D&B's fourteen key financial business ratios to measure a company's solvency, efficiency and profitability. Ratios are a means of highlighting relationships between financial statement items and are used in two ways: for internal analysis of items in a balance sheet; and/or for comparative analysis of an entity's ratios at different time periods and in comparison to other entities in the same industry. The ratios are divided into three groups:
Solvency Ratios - measure the financial soundness of a business and how well an entity can satisfy its short- and long-term obligations
Efficiency Ratios - measure the quality of an entity's receivables and how efficiently it uses and controls its assets, how effectively the entity is paying suppliers, and whether the entity is overtrading or undertrading on its equity (using borrowed funds).
Profitability Ratios - measure how well an entity performs; analyze how profit was earned relative to sales, total assets and net worth.
Industry norms offer a comparative analysis between an entity and how it is performing compared to its piers in an industry.
To learn about the 14 individual ratios and formulas to derive these ratios, click here. Classroom or web training is available for in-depth discussion on financial analysis and/or predictive scores. Contact us if your team can benefit from in-depth training.Back to top
D&B Global Standards - Another step in improving data quality
D&B is pleased to introduce Global Data Standards as the next step in delivering data quality improvements. As we closed data gaps locally, we recognized a need for a more consistent approach to information quality to provide a consistent customer experience with our global data.
In redefining our quality standards, we wanted to evaluate the information in the way that you do. We used our existing ACT+C methodology (Accuracy, Completeness, Timeliness and Cross Border Consistency) to develop our new global standards (Resolution, Accuracy, Insight). Agencies will not only benefit from these standards - you will now understand how we will achieve them by 2010.
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To achieve the complete resolution you need, D&B is working to achieve:
- 100% coverage of the Commercially Active Business Universe with every record containing Identity Data Elements (Business Name, Address, Telephone, Primary Contact Name)
- Failure or Delinquency Scores available in at least 34 countries
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To ensure the accuracy you need, D&B is working to achieve:
- 90% Accuracy of Identity Data Elements (Business Name, Address, Telephone, Primary Contact Name)
- 100% of Failure and Delinquency Scores meet predictive performance standards and are monitored annually. A world-wide scoring panel has been established to provide oversight and ensure the quality of Failure & Delinquency Score around the world.
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To ensure we have the insight you need, D&B is working to achieve:
- 60% of the active records will contain at least 1 Trade or Payment Experience
- 20% of the active records will contain Family Tree Linkage
- 100% of Failure and Delinquency scores are globally consistent in scoring methodology, terminology and presentation
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Tell us what you think about our new global standards.
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D&B in the News
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Financial Crimes Report to the Public, Fiscal Year 2007. Dun & Bradstreet was highlighted as one of the resources helping to combat corporate fraud.
"In addition, the Financial Crimes Enforcement Network (FinCEN) and Dun & Bradstreet have been able to provide significant background information on subject individuals and/or subject companies to further investigative efforts."
Click here to read full report
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| Fortune's America's Most Admired Companies 2008. D&B Ranked #1 Industry Leader for third year in a row.
Click here to view article
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