ESSA Procedure:

Member companies whose credit rating falls below 30 

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(Per CreditSafeUk.com)

All members to be informed in writing of this new criteria and the change of process and for it to be made available to them at all times within the member zone www.essa.uk.com/members-home.

1. Credit check of all members to take place each quarter, starting from October 2018.  The process of credit checks on their own do not adversely affect a company’s credit rating.
   
   
2. Upon identifying a company whose credit rating has fallen below the agreed threshold of 30, ESSA will write to the company’s registered main contact informing them of our findings.  This communication will simply act as a general awareness of our findings.  Our research has shown that quite often a company is unaware of its credit rating and the potential negative effect it can have on trading. 
   
   
3. At the point of the next quarterly full credit check report, if this company remains under the threshold of 30, ESSA will proceed to write a further letter to the company’s registered main contact on our member database, making them aware of our further findings and inviting them to engage positively in a process of trying to improve the situation. 
   
   
4. If at the next quarterly full credit check the member having engaged with ESSA continues to return a credit rating of below 30 and shown no improvement in this area, (this would be 3 consecutive quarterly reports), the member will be written to again and informed that a full review of their membership eligibility will now be conducted.  This review will include the submission of a report to the next available ESSA Board meeting.  At all times, an open dialogue will be kept with the member in question and the opportunity to provide information supporting their continued membership actively sought. 
   
   
5. The ESSA Board on review of ESSA’s report can at this point decide upon two courses of action. 
   
   (i)      Allow company to remain in membership whilst communicating a requirement for the member to provide evidence/plan that it has identified what key elements have contributed to their low credit rating and that it is on course to improve its current credit rating at the next period of reporting.
   
   (ii)     Suspend membership pending further investigation and to seek evidence from member that it is on course to improve its current situation at the next period of reporting.
   
   (iii)     The decision to suspend membership in the most severe cases would see the temporary removal of access to key member benefits and services until the suspension ends.  Membership fees remain payable during any period of suspension.
   
   
6. At the point of the 4th quarterly full credit check of below 30 credit score, no indication of improvement or no positive response to improving current situation, the ESSA Board can take the decision to terminate membership, in accordance with Article 12 of the Company’s Articles of Association and for breach of the ESSA Code of Conduct in reference to business trading ethics, expected industry standards and the risk of lower business standards that might bring ESSA and its members into disrepute.
   
   
7. At all times, the member will be communicated to in writing with regard any decisions made and at all times a member will have the ability to appeal any decision to the ESSA Director and Board in writing.  During any appeal, a company’s membership will remain suspended.

ESSA strongly believes the introduction of these additional checks are a positive step towards notifying our members of something they might be oblivious to that may be severely hampering the everyday running of your business and secondly, looking at supporting our members to make positive steps towards improving their companies financial health and ultimately their own performance.

Full details of how to appeal any decision made by ESSA can be requested in writing from the ESSA Director, ESSA Ltd, 119 High Street, Berkhamsted, Herts HP4 2DJ.

September 2018

Background

At the start of 2018 ESSA introduced an additional process during the verification of new applications for membership; this process was the introduction of credit checking of all new member applications with a minimum requirement of 30 being set as the benchmark for qualification. This is an addition to all current requirements for membership.

This minimum credit rating was agreed upon by the then ESSA Board after seeking advice and investigating rating mechanisms of several approved credit checking facilities.  The introduction of this process for new member applications has shown clear benefits and on the whole has been positively received by companies who have applied for membership in 2018.  The two companies whose applications were declined on the basis of this new check, both responded positively to the news, had not realised their credit rating had dipped so low and assured us that they would seek out ways to remedy the situation before any future reapplication.  Both companies understood and appreciated the value of creating a more rigorous membership application process. 

Therefore, it has been agreed by the ESSA Board that there are clear benefits to the process of regular financial health checks on our current membership and in a similar fashion to our regular insurance checks, quarterly credit checking will be introduced across the whole of ESSA membership from October 2018. 

The desired outcome is that as part of a standards based association, ESSA has a duty to make sure the companies it represents and conversely, those companies trading under the ESSA Kite Mark, uphold the standards of the ESSA Code of Conduct and Quality Charter.  We also hope that it gives greater confidence with regard to member to member trading which is a key part of ESSA membership. 

ESSA will follow the Member Credit Checking Procedure for any member that falls below the minimum requirement.

September 2018