Company credit ratings are affected by lots of things… but one of the major ‘unknown’ factors is a company’s SIC code… and in my experience most company’s don’t know what their’s is.
SIC stands for Standard Industrial Classification… it’s used to classify your business by type of economic activity…
Some can be very very specific… e.g. if you’re into ‘scaffold erection’ there’s a special SIC code just for that… some can be very general e.g. ‘other business support services’
And what code you have really matters… Because agencies use it to compare your performance with others in same SIC code as part of their rating process.
If you’ve got the wrong one, or don’t look good in the one you’ve got, it can really hurt your credit ratings.
So who decides what SIC code you should have?
Believe it or not…You pick your company’s code and put it on your Annual Return which gets filed at Companies House (you can put up to 4 codes on the return, but the agencies will use the first one as the primary code).
I find that most companies leave this to their accountants, but I encourage owners to take an interest in their SIC code… and change it if necessary…
Because wrong SIC code = wrong rating?
The list of SIC codes can be viewed at Companies House SIC list
It may be useful to identify several companies like yours (or even your direct competitors) and see what SIC codes they’re using.
You can see any company’s Annual Return and therefore their SIC code for £1 at Companies House
(this is a brief excerpt from the book ‘Credit Ratings for Companies… 101 things your mother should have told you’… available free if you sign up for my newsletter)
HAT TIP to Caroline White who runs Liverpool University’s Growth Catalyst programme… not only did she make sure my session at the Uni the other night went smoothly… she even walked this old Manc back through the dark depths of Liverpool to the train station… AND she gave me the great title for this post… (‘How your SIC can make you sick!’)