Risk Indicator Methodology

Overview

The CompanyPulse Risk Indicator is an automated scoring system that assesses company risk across 9 signal categories. Every signal is derived from publicly available data held at Companies House. The indicator is designed to provide a quick, at-a-glance assessment to support due diligence — it is not a credit rating or financial recommendation.

How It Works

Each company starts with a baseline score of 50. Positive signals (such as company longevity, regulatory compliance, and strong governance) increase the score, while negative signals (such as insolvency history, overdue accounts, or financial losses) decrease it. The final score is clamped between 5 and 95.

Score Bands

Signal Categories

1. Company Status

The current status of the company as recorded at Companies House. Active companies receive a neutral score. Companies in liquidation, administration, receivership, or subject to insolvency proceedings receive significant negative adjustments.

2. Company Age

Longevity is a strong indicator of business stability. Companies established for 50+ years receive the highest positive adjustment, while companies less than 1 year old receive a small negative adjustment. This reflects the well-documented correlation between company age and survival rates.

3. Company Type

Public limited companies (PLCs) are subject to greater regulatory oversight and public reporting requirements, and receive the highest positive adjustment. Charitable companies regulated by the Charity Commission also score well. Standard limited companies and LLPs receive a modest positive signal.

4. Insolvency History

Companies with prior insolvency proceedings on record receive a significant negative adjustment. Companies with a clean insolvency record receive a small positive adjustment.

5. Accounts Compliance

Whether accounts have been filed on time is a key compliance indicator. Overdue accounts trigger a negative adjustment that increases with the length of the delay. The recency of the last filed accounts is also considered — accounts filed within the last 15 months are a positive signal.

6. Confirmation Statement

The confirmation statement (formerly annual return) is a basic compliance obligation. An up-to-date confirmation statement is a positive signal; an overdue one suggests potential non-compliance.

7. Governance

The number of active officers serves as a proxy for governance strength. Companies with 5 or more active officers receive the highest positive adjustment. Companies with no active officers on record receive a significant negative adjustment, as this may indicate the company is dormant or abandoned.

8. Filing Activity

Recent filing activity indicates an actively managed company. Filings within the last 3 months are the strongest positive signal. Companies with no filings for over 2 years receive a negative adjustment.

9. Financial Signals

When structured financial data is available (extracted from iXBRL filings), additional signals are evaluated:

• Profitability — whether the company reported a profit or loss in the latest period, and whether losses are consecutive
• Net Assets — a positive net asset position is favourable; negative net assets may indicate balance sheet insolvency
• Revenue Trend — year-on-year revenue growth or decline
• Leverage — the ratio of total liabilities to total assets, indicating the company's debt burden

Financial signals are only included when iXBRL data can be parsed from the company's filed accounts. Many companies (particularly PLCs filing in PDF format, and micro-entities) may not have parsed financial data available.

Improving Your Score

If you are a company director reviewing your own company's risk profile, CompanyPulse provides actionable improvement advice for every negative or cautionary signal. Here are the most impactful steps you can take to improve a risk score:

Quick Wins (Compliance)

• File overdue accounts — overdue accounts are one of the most damaging signals. Use the Companies House WebFiling service to submit immediately.
• File your confirmation statement — this costs just £13 online and is one of the easiest signals to fix. It confirms your company details are up to date.
• Submit any outstanding filings — regular filing activity demonstrates an active, well-managed business.

Governance

• Appoint active directors — companies with no active officers face severe penalties. Companies with 3 or more active officers demonstrate stronger oversight and score higher.

Financial Health

• Return to profitability — the next filed accounts showing a profit will clear loss-related negative signals.
• Strengthen the balance sheet — inject capital, convert director loans to equity, or retain profits to address negative net assets.
• Reduce leverage — lower debt-to-asset ratios signal financial stability. Consider refinancing or debt reduction strategies.
• Grow revenue — the next filed accounts showing year-on-year revenue growth will improve the revenue trend signal.

Factors You Cannot Change

• Company age — this improves naturally over time. Focus on other signals to offset a young company age.
• Insolvency history — historical records remain on Companies House indefinitely. Strong current financials and compliance can offset this.

Professional subscribers can see personalised improvement advice for each negative signal directly on the company profile page and in downloadable PDF risk reports. View plans

Data Source

All data used in the Risk Indicator is sourced from the UK Companies House public register via their official API and Streaming API. CompanyPulse does not use any proprietary or non-public data sources in this calculation.

Limitations

The CompanyPulse Risk Indicator has important limitations that users should be aware of:

• It relies solely on Companies House data, which may not reflect the current financial position of a company
• Filed accounts can be up to 21 months old (9-month filing deadline after a 12-month accounting period)
• Micro-entity and dormant company accounts contain very limited financial information
• The indicator does not consider industry-specific risk factors, market conditions, or qualitative factors
• Companies House data may occasionally contain errors or stale information
• Group structures, parent guarantees, and inter-company relationships are not currently modelled

Disclaimer

The CompanyPulse Risk Indicator is provided for informational purposes only. It is not a credit rating, credit score, or financial advice. It should not be used as the sole basis for any business, credit, or investment decision. CompanyPulse accepts no liability for decisions made in reliance on this indicator. Users should conduct their own independent due diligence appropriate to their specific circumstances.

CompanyPulse is not authorised or regulated by the Financial Conduct Authority (FCA). The Risk Indicator is not a regulated financial product.

For questions about this methodology, please contact hello@companypulse.co.uk.