#paydex

Boost Your Business Credit with a Strong PAYDEX® Score! 💼📈

Did you know your PAYDEX® Score is a key indicator of your business’s financial health? 🏦✨ Keep track of your payments and maintain a strong credit profile to unlock better financing opportunities.

The PAYDEX score, created by Dun and Bradstreet, is a critical business credit score. 

It measures how risky it is to lend money to a business, similar to how a personal credit score evaluates the risk of lending money to an individual.

According to Dun & Bradstreet, the PAYDEX Score is a unique numerical indicator that weighs how promptly a firm pays its bills over the past year based on trade experiences reported by various vendors. It essentially serves as the business equivalent of a personal credit score.

There are significant distinctions between a business PAYDEX credit score and an individual FICO consumer credit score. 

While consumer FICO scores range from 350 to 850, the PAYDEX Score ranges from 0 to 100, with 100 being the highest achievable score.

Individual credit scores consider various factors.

However, the PAYDEX score is solely based on whether a business makes timely payments to its suppliers and creditors within agreed-upon terms.

Most lenders and suppliers prefer a PAYDEX score of 70 or higher, with scores of 80 or above considered very good. 

Maintaining a positive PAYDEX score is crucial for establishing new credit and increasing credit limits beyond $100,000 for business owners.

Establishing a positive PAYDEX credit score can be accomplished within 60 days. 

Firstly, apply for a DUNS Number—a nine-digit business identifier with Dun and Bradstreet. 

Once you have a DUNS number, seek out merchants willing to extend credit and report it to Dun and Bradstreet.

First, make sure you have a good credit report with Dun and Bradstreet to improve your business credit. This will give you a good PAYDEX score. 

Next, get more credit for your business and use it regularly. 

Always pay your bills before they are due to increase your score to 80 or above. Doing this can help you quickly get a good PAYDEX score. 

Keep paying your bills on time, and your score will increase. This will help you get more credit in your business's name.

About the Author

Robert Jackson is currently the CEO of Alln4fam Consulting Inc. 

At Alln4fam Consulting, he specializes in helping business owners establish excellent business credit scores and then leverage those scores to access cash and credit for their businesses.

For more information on business credit scoring,businesscredit, visit: https://alln4businesscredit.com/

Businesses require credit on an ongoing basis. Borrowed funds can be employed to invest and expand operations in order to increase the size and profitability of the company. You might think that only firms with bad performance borrow money but the reality is that most of the successful corporations in the world need external funds to grow.

Certainly, funding can be a great idea when the firm has solid plans to allocate the money and make it productive. However, obtaining these funds may become somewhat challenging if lenders estimate your default risk is high. In general, interest rates and down payments increase as the borrower shows a poor credit history. If yours is not too favorable, lenders will simply conclude that such behavior will repeat in the future. That is why showing a low-risk profile becomes an important goal for companies looking for funds.

How can you measure a company’s creditworthiness? In order to support an impartial judgment about how reliable a company is in terms of fulfilling its financial commitments, Dun & Bradstreet created the Paydex Score.

Dun & Bradstreet is a US company that has pioneered the provision of financial and commercial data related to millions of companies operating in hundreds of cities around the world. In the following article, we will explain what the Paydex Score actually is and how you can increase yours.

What is the Paydex Score?

The Paydex Score is an indicator of how well a company has fulfilled its obligations with its suppliers and lenders during the past year. This score measures the creditworthiness or, in other words, the timeliness of payments made to vendors and providers through a dollar-weighted formula. Larger invoices weigh heavier on the score than smaller ones. The score takes data from every payable account a firm had over the past 12 months and the number of days before or after the due date in which such payments were made. The due date is the result of the “agreed time”. If the supplier proposes a net-30 credit and the client agrees, this denotes that all invoices should be fully paid within 30 days.

The result of a Paydex Score is always a positive number between 0 and 100 and the ranges are interpreted as follows: a score under 20 means payments come over 120 days past due; between 20 and 40 means they come 60-120 days past due; between 40 and 70 means 15-60 days past due; an 80 score means they come perfectly on terms; and a score between 80 and 100 means the company pays 1 – 30 days sooner than terms. The shorter the time between the agreed time and the date of the disbursement the higher the Paydex Score.

Lenders and suppliers prefer clients with a high Paydex Score, usually a number over 75. This indicates that payments are made almost always on time and, when delayed, the days past due are few.

If you are interested in knowing your business’ Paydex Score, you have to obtain your Data Universal Numbering System or DUNS as the first step. This is a nine-digit code given by Dun & Bradstreet that will belong only to your company. You can apply for the DUNS through the company’s website. Every DUNS indicates a unique number. The DUNS numbers are widely used in the business world as a business’ unique identifier, especially in the United States. Moreover, it is currently a kind of standard identification thanks to the size and quality of Dun & Bradstreet’s database, in which a broad range of company information is available.

Secondly, you must have open trade lines in order to build data related to your credits. Finally, the index will be calculated, and it will be available for companies interested in looking at your score.

In case your resulting Paydex Score is not as good as you want, you would need to make a plan to improve it. Definitely, making efforts to have a Paydex Score over 75 is an appropriate strategy before looking for borrowed funds.

How could you achieve a higher Paydex Score?

Here are a few practical tips to increase your Paydex Score.

1. You should do your best to pay earlier. You must manage your business credit wisely by paying on time and even pay large commitments a little bit earlier than expected.

The Score requires at least 4 payment experiences, so you have to comply with this minimum requirement. If obtaining this number of experiences will be hard for your company due to its size or its business model, you can use a business credit card to generate enough data that will be reported and incorporated on your score.

2. Another way to increase your Paydex Score is to negotiate longer terms with your vendors and suppliers. This way, you will be more likely to pay within the agreed terms.

Maybe you think that those recommendations are nice, but you want to obtain a higher Paydex Score very soon because you need funds urgently.

In that case, those advices are far from being a real solution.

If this is your situation, you can benefit from our services at CorporateCashCredit.com. Our service aims to boost your business’ credibility in order to get a higher Paydex Score, so you can get funded EASILY.

During the 45-day process of obtaining your 80 Paydex on Dun & Bradstreet, we will help you make 4 or more credit payment experiences that will help you in achieving an 80 Paydex Score. We will create charges for you to pay off before their due dates, so you can become credible in the eyes of lenders. Once your payments are reported and your Paydex exceeds 80, we can help you get funded through our network of allied lenders who are ready to work with all of our clients.

APPLY NOW for a free credit analysis and give us the opportunity to help you!

The corporation Dun and Bradstreet assigns a special credit score to a business called a Paydex. That score rates the likelihood of any given business to repay vendors, suppliers, and creditors in a timely manner. Unlike personal credit scores which range from 0 to 850, a Paydex score ranges from 0 to 100. The higher the number, the better your chances of getting an unsecured business line of credit to pay for expansions, employees, supplies, and other business-related expenses. By responsibly utilizing an 80 Paydex program, you essentially put your business in a low-risk category. An 80 or better score indicates that your payment history is timely and therefore has a decreased chance of being repaid late.

Understanding How the Paydex Is Used by Your Business

Your personal credit rating is used primarily to measure the financial hazard you present to lenders, or lack thereof. However, a Paydex score is used in several more ways. For example, it can affect the premiums and APRs that your business is required to pay on credit cards and bank loans. An 80 Paydex score lowers the interest rates charged to your company and puts your business in line to receive better unsecured funding products.

Another way that your Paydex score is used typically doesn’t apply to consumers, and that’s when it comes to borrowing from vendors. Vendors deliver goods and services before invoicing the business and then receive payment for those goods and services after the delivery. As a result, vendors must assume a certain level of risk that they won’t be paid. So, the Paydex score of a business is a useful metric for determining whether a client will leave a vendor hanging. Poor Paydex scores make suppliers naturally reluctant to do business, and may ultimately limit the size and scope of goods and services they’re willing to part with before being paid.

Knowing how to build corporate credit fast by establishing an attractive business credit Paydex score is the only way to succeed in this highly competitive economy. It’s important that you know what goes into a Paydex score. Additionally, it’s vital to be aware of how your business spending habits affect that.

How a Paydex Score Is Calculated

To get corporate credit and use it as intended, you must understand how a Paydex score is determined. Put simply, your score is calculated based on a history of trade references regarding your business. Instead of looking solely at your business’s history of financing from lenders, Dun and Bradstreet uses a company’s various payment histories with the vendors and suppliers it works with. As such, Dun and Bradstreet recommends that a business have at least four separate trade references on file to accurately calculate a Paydex score.

Although most trade references remain on a business credit report for quite some time, only those reported within the last 2 years are used to calculate a Paydex score. Therefore, it is often difficult for new businesses to establish corporate credit without a workable strategy. It is in a company’s best interest to maintain a consistent flow of trade references and have them reported in a timely manner. Unfortunately, credit card payments don’t count as a trade experience.

What Qualifies as a Trade Experience?

Businesses often face the challenge of locating enough vendors to meet the minimum trade experiences needed to receive a Paydex score. In fact, some smaller vendors don’t report their transactions to Duns and Bradstreet without provocation. This is generally the underlying issue for businesses in the service industry, because they don’t work with many suppliers. Tech startups have this problem as well, since they usually have very few outside needs. For businesses like that, finding trade experiences means knowing where to look.

One way to increase trade experience is to use accountants, lawyers, and landlords as references, but only if those relationships are billed through invoices and have relative payment terms. Additionally, setting up a business account with a major office supply store can help, as they usually report trade accounts directly to Dun and Bradstreet automatically. Then again, having plenty of trade experience won’t matter if you don’t have an active account with Dun and Bradstreet to begin with.

How to Get Your Paydex Score

To get a Paydex score at all, your business must be registered with Dun and Bradstreet with a valid DUNS number. Although DUNS numbers are assigned to each location of your business, your Paydex score is assigned to the headquarters. So, if your company has numerous offices that work with suppliers separately, you should always use the primary DUNS number with vendors. This will help you get a Paydex score by generating plenty of trade experience.

Tips to Improve Your Paydex Score Fast

Establishing a business credit Paydex score is only half the battle. You must know how to manage it and improve upon it when necessary. A Paydex rating is designed to measure a company’s financial responsiveness, so it’s vital to maintain high scores within the company as a whole. Businesses should negotiate longer payment terms with each vendor to increase the probability of on-time payments and ensure that the company’s trade experiences reflect positively on the Paydex.

Keep in mind also that only references from the past two years have a direct effect on your score. Recent trade experiences are thus more valuable and will have a greater impact. Furthermore, the relative size of each unsecured business line of credit weighs heavily on your overall rating. As such, payment histories on larger accounts will affect your Paydex more than the payment histories on small accounts. For example, paying a $20,000 bill late will affect your Paydex score a lot more than paying off a smaller $500 bill would. Choose your battles wisely or work with a team of professionals who can help you get your Paydex to 80 fast.

Moreover, understanding what each of the values on your Paydex score means is an important factor to properly managing and improving your rating. While businesses shouldn’t be concerned about having a perfect score, business owners should do everything within their power to adequately elevate their rating through a feasible 80 Paydex program. To get enough corporate credit to successfully run and improve your business, it’s vital that you set out to establish business credit as soon as possible.