Have you ever wondered how the Coface team evaluates transactions and business partners? The key is an indicator called the Coface Score. It’s more than just another rating. The Coface Score is a global benchmark that guides decisions on whether to grant better financial terms — for both existing partners and new ones. For CEOs and CFOs of Swiss SMEs, especially those with cross-border clients, understanding this score is essential. Here, we share the fundamentals of the Coface Score.
What is the Coface Score?
The Coface Score is a rating from 1 to 10 that measures a company’s ability to meet its financial commitments over the next 12 months. It brings together key insights — from financial data and market conditions to competitiveness — into one clear indicator. A score of 1 or 2 signals imminent default, while a score of 10 reflects the highest possible financial strength, typically found in state institutions or large corporations.
This single scale provides a simple way to assess the probability of default. Coface monitors a wide portfolio of companies throughout the entire year to ensure that the evaluation remains relevant. For clients and partners, this score helps answer practical questions: Should I trust this supplier with flexible terms? Do I grant this customer a credit line? The Coface Score provides the clarity needed to make such strategic decisions.
What makes the Coface Score unique?
The Coface Score stands out due to its structure: a combination of a global methodology and the expertise of local analysts. In over 50 countries, our teams use the same framework to evaluate companies. They rely on comparable KPIs and standardized methodologies. This approach ensures that a Swiss SME can assess a German supplier or an Asian distributor using the same criteria.
The process is not entirely mechanical. Analysts interpret financial data using local knowledge, media monitoring, and signals from business networks. For example, a disruption in raw material supply or sector-specific bankruptcies can affect the assessment, even if the balance sheet appears healthy. This human element makes the Coface Score more flexible and credible than purely automated ratings.
Importantly, Coface does not automatically downgrade all companies in a sector when macroeconomic indicators change. Each company is reviewed individually. This ensures that businesses are not unfairly penalized by broad market trends.
When is a company’s Coface Score updated?
A company’s Coface Score can be updated when new triggers appear. Some triggers are external, such as political instability, new regulations, or international sanctions. Media reports, signals from business partners, or updates from financial information providers can also prompt a reassessment.
Internal triggers matter as well. For example, if a client delays payments or if concerns arise during trade risk management, Coface analysts may reassess the company. This ensures the score evolves with real-world conditions rather than remaining static.
How the Coface Score is decided
Financial documents are at the heart of the process. Analysts review balance sheets, profit and loss statements, and liquidity indicators, ideally for the past three years. Direct contact with the company ensures accuracy and avoids decisions based only on outdated or partial data.
Once a company joins the Coface portfolio, it is closely monitored. Our teams stay fully attentive. This ensures the score reflects not only past performance but also forward-looking risks. For example, during the COVID-19 pandemic, many companies’ situations changed within months. Frequent reviews allowed Coface to capture these shifts quickly.
Understanding the Meaning Behind Each Coface Score Level
To simplify, the Coface Score can be grouped into five main categories:
◾ 1–2: High risk → Companies facing extreme risk, with little to no chance of recovery.
◾ 3–5: Fragile → Young or unstable businesses with weak stability; default risk is above average.
◾ 6–7: Solid → Companies with fair to good financial stability, though still sensitive to market changes.
◾ 8–9: Strong → Large, established firms with high stability; only major external shocks could affect them.
◾ 10: Top tier → The most resilient companies and institutions, whose strength remains unquestioned even during crises.
For decision-makers, this scale provides a clear compass. Instead of relying on intuition or fragmented information, leaders can compare partners worldwide using the same risk standard.
Why Swiss SMEs should care about their Coface Score
Swiss SMEs are increasingly connected to global supply chains and cross-border customers.
Late payments and defaults are common. Using a transparent and consistent scoring system helps reduce these risks and supports growth.
For leaders balancing growth and caution, the Coface Score is more than a number.
It is a decision-making tool that protects working capital, supports negotiations, and builds trust in international relationships.
