When accountancy firm Shelley Stock Hutter carried out an investigation into three well-known credit insurance companies following negative reports from its media agency clients, the results made alarming reading.
The credit companies investigated - Dun & Bradstreet, Experian and Creditsafe - recommended hugely different credit ratings for SME advertisers, prompting SSH to conclude that credit ratings are, effectively, a "lucky dip".
For one advertiser, credit agency A recommended no credit facility, while credit agency B recommended a credit limit of £50,000. For another client, one credit agency recommended a credit limit of £43,000, while the next recommended a credit limit of a staggering £17.5m.
Bobby Lane, partner at SSH, says: "Our research has clearly illustrated that getting a fair credit rating is very much a lucky dip. Considering the different verdicts given by different credit ratings agencies, any media agency that relies solely on credit ratings is only holding one piece of the jigsaw."
The findings could cause media agencies more than just sleepless nights, particularly as the coming year looks to be no less challenging than the last.
If media agencies accept new clients on the basis of an apparently healthy credit assessment when the real picture is very different, the business leaves itself open to unwelcome risks such as non-payment of bills.
Many media agencies are currently placing their trust in credit ratings firms without carrying out additional due diligence when deciding who to work with.
This can be a dangerous tactic. In one instance, a media agency client of SSH relied solely on a credit rating when deciding to contract with an advertiser. That advertiser, which had a seemingly healthy rating, went on to cause the agency a significant loss.
In addition, media agencies spend considerable resources - in terms of both time and money - pitching for potential clients, yet place their trust in credit ratings alone to check the company is in good financial health.
So how can media agencies safeguard their position when looking at existing or prospective clients? The first step, says SSH, is to identify the financial impact on the agency should the client fail.
If this loss is significant, the agency should seek out additional information on the client - business plans, management accounts or even a professional reference - to provide further assurance, rather than relying solely on a credit rating.
Don’t ignore the credit rating for your existing clients either, says SSH’s Lane, since an incorrect credit rating may mean agencies "continue to service a client they believe is financially sound but who may be unable to pay".
Lane advises: "Media agencies must do their homework and dig deeper into the financial position of clients and suppliers when deciding who to work with.
"This guarantees media agencies possess the most accurate picture of the client’s business performance and gives them a better understanding of the company as a whole, enabling them to generate a more reliable credit score."
Media buyers, beware.