How RapidRatings is Uncovering Suppliers Financial Health

In an era of global economic uncertainty, understanding suppliers' financial health has become critical for procurement professionals. As we navigate our way through 2025, global disruptions continue to impact supply chains worldwide, making supplier stability a key concern for organisations across various industries.

RapidRatings has emerged as a vital tool for procurement teams seeking to mitigate supply chain risks. Trusted by companies like McDonald’s, Milwaukee Tools, Unilever and Chick-fil-A, the company's Financial Health Rating (FHR) system offers a forward-looking, data-driven approach to assessing supplier financial stability, providing crucial insights during these volatile times.

Companies are investing heavily in technologies to strengthen supply chain resilience. This investment highlights the growing recognition of robust supplier risk management strategies, where financial health assessment plays a pivotal role.

The need to understand and manage supplier financial risks has never been more important. As businesses face increasingly complex economic challenges, proactive assessment of financial stability can mean the difference between smooth operations and potential supply chain disruption.

RapidRatings: Financial health insights

As procurement teams look for tools to obtain an insight into the financial health of their suppliers is RapidRatings, providing forward-looking, quantitative analysis of both public and private companies. 

With its FHR, RapidRatings provides highly accurate and predictive risk assessments that focus on financial health as a core indicator of potential risks across a supply chain.

RapidRatings' approach enables organisations to make proactive and informed decisions. In the past, procurement and supply chain managers have relied on historical payment data as a proxy for suppliers' financial risk, but its FHR provides forward insight with an unmatched depth of analytic rigour.

RapidRatings CEO John D'Aleo, who joined with more than 25 years of fintech risk management experience, specialising in driving strategy and growth across sales, marketing, product and operations, speaks to Procurement Magazine about why understanding the financial health of suppliers is more critical now than ever before.

Suppliers' financial health: A critical function

In today's market, knowledge and data are the key to a resilient supply chain. Companies of all kinds are faced with significant risks to navigate. Economic uncertainties, like inflation and interest rates, global disruptions, such as port strikes and natural disasters, along with tariffs and trade wars and years of financial health pressure on private companies, all mean risks abound.

John believes that, in 2025, it will be critical for companies to manage any downside risks in their supply chains while seizing opportunities to grow with strong suppliers.

"These global uncertainties, coupled with increasing regulatory pressures, make it crucial to have real-time insights into supplier risks to prevent potential disruptions and safeguard business continuity," he adds.

Assessing a private company's financial health is more challenging due to limited visibility and lack of public financial reporting. RapidRatings fills this void by providing visibility into private company financials alongside public company assessments. This distinction is critical as most Fortune 1000 companies' supply chains are 75% private companies, says John.

How does RapidRatings do this? John explains: "Obtaining financial statements from private companies has always been tricky. However, for over a decade, RapidRatings has sourced financial data directly from private company suppliers on our clients' behalf. At this point, we have rated tens of thousands of private companies from more than 140 countries."

RapidRatings uses its proprietary FHR modelling that quantitatively analyses financial statements to evaluate supplier risk. Each rated company is evaluated on 73 ratios that are scored based on the historical importance of that ratio in a company's development over the past 40 years and across 12 million company-years' worth of data. This is done on an industry-specific basis across 24 industry models. So, while the FHR is produced on a straightforward 1-100 scale, the algorithms behind it are incredibly sophisticated.

Obtaining such information presents a range of challenges. Gaining comprehensive visibility is complex, particularly given the reliance on private companies in global supply chain networks.

John explains that RapidRatings addresses these challenges by providing a centralised system for financial health monitoring.

"We enable procurement teams to evaluate risks across their entire supplier base and conduct scenario planning effectively,” he adds. “With the right tools and expertise, such as those offered by RapidRatings, companies can successfully reach their goals."

The red flags

Once procurement leaders obtain this information, there are a range of factors they should keep in mind when assessing financial health.

John details: "Procurement leaders should evaluate the financial health of their suppliers and ensure the data used for this assessment is up to date – ideally collected within the past year. They should then look at the financial health trends over time. Is financial health improving or deteriorating? How rapidly is it changing and how consistent is the trend? Rapid declines or slow and steady deterioration is a big red flag.

"Industry comparison is another key factor. Is the company's financial health above or below the industry average? How does its trend compare to peers? Deviations from industry trends, positive or negative, warrant attention.

"Lastly, understanding the drivers of financial health is essential. Liquidity, leverage, profitability, coverage and efficiency are core indicators, with red flags arising from weaknesses in any of these areas."

Harnessing insights to manage relationships and risks

With this information, procurement leaders can leverage the financial health insights to enhance transparency and trust with suppliers, identify high-risk vendors early and either work with them to remove the risk or engage in contingency planning with alternative supplies. 

John points out that such insights “enable informed decisions during vendor selection, onboarding and ongoing management to mitigate risks and maintain supply chain stability.”

With the prospect of tariffs on the horizon, RapidRatings conducted a stress test using its proprietary financial health data to assess the potential impact on public and private companies. 

John adds the analysis revealed that global suppliers could face significant challenges, with 39% of private companies moving to a higher risk rating and 25.4% of public suppliers becoming riskier. 

“While public suppliers are somewhat more insulated from the impact of tariffs, they are not immune,” he highlights. “As seen in the graph, both public and private suppliers become riskier overall. Our stress testing demonstrates that you only know which suppliers are at risk when you analyse their financial statements. That’s how our clients get crucial insights that others miss.”

RapidRatings helped a long-time client and one of the largest food and beverage companies in the world avoid disruption by identifying financial risk in one of their key suppliers.

"This supplier's financial health was rapidly deteriorating as shown in their FHR," John says. "Our client was able to address the issue head-on and take proactive steps with said supplier to ensure that supplier did not fail."

RapidRatings’ ongoing evolution

Supplier financial health assessment is evolving as clients demand granular, real-time insights integrated into risk workflows, while trying to manage ever-growing lists of suppliers and vendors.

John concludes: “Businesses struggle to manage growing supplier workloads without proportional resources, often overseeing hundreds or thousands of suppliers.

"Limited visibility into private suppliers, which dominate most supply chains, remains a major obstacle due to their lack of financial transparency. Additionally, consolidating multiple risk domains—financial, cyber, ESG, geopolitical and more—into a unified view is increasingly complex.

"RapidRatings tackles these issues with real-time financial health analytics, enhanced dashboards, AI automation and API connectivity. By leveraging our technology, organisations gain predictive, actionable insights to mitigate supply chain risks, prevent disruptions and keep your business thriving."

To read the full story in the magazine click HERE

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