Estimated turnover

Why isn’t turnover available for every company?

The UK is great at supporting entrepreneurs by creating rules that encourage start-up formation and competition. One of these rules is that companies with revenues of under £6.5m qualify as Small Companies* and Companies House will not publish their full accounts; instead it will just show an abbreviated balance sheet which gives a summary snapshot of the financial standings of the company at the end of the financial year. The idea behind this is to reduce the amount of information available for larger competitors, thus helping create a more level playing field that small players can more easily enter and compete in.

What is estimated turnover?

We are the only platform to use artificial intelligence (AI) to estimate turnover from the parameters that we do have available — most importantly the abbreviated balance sheet — but also other information such as the company sector, age and location. AI is great at learning patterns, so by giving our AI engine a huge set of companies where turnover is available, it can build a model which maps these available parameters to the turnover. The figure below gives a real example of one of these models. Once we have built this model, we are able to run it over all companies in our database to generate an estimated turnover. If an estimate is shown, it will be clearly marked; however, companies that do publish their actual turnover will have this shown instead.

Interpreting estimated turnover

The turnover estimation AI model is optimised to give as many estimates as close to the true value as possible; as a rule of thumb this aims to be within 25% of the true value. However, outliers can occur — for example a start-up that has recently taken on a large amount of equity funding may have a balance sheet that looks like a much larger company. As such, these numbers are a great guide for filtering and searching for target companies, but caution should be exercised when quoting the figures.

The future

Right now, it seems that the capabilities of AI are taking a leap forward on a daily basis, so we have no doubt that our estimates will continue to improve. Indeed, continually adding to and improving our data is our key focus at Inganta.

* The company must also have £3.26 million or less on its balance sheet, or 50 employees or fewer (or any combination of two of these three conditions to qualify)