The Dun & Bradstreet PAYDEX Score Explained
by Gerri Detweiler
What is the PAYDEX score?
The PAYDEX® score is a business credit grudge that ’ s generated by Dun and Bradstreet ( D & B ). Their model analyzes a business ’ payment performance ( i.e., if it pays its bills on time ) and gives it a numerical score from 1 to 100, with 100 signifying a arrant payment history .
merely like a consumer ’ second creditworthiness hinges on a FICO score, a business ’ randomness creditworthiness is determined by a score system angstrom well. One business accredit score that is typically used by lenders, vendors, and suppliers to judge whether a business is qualified for different finance products is the PAYDEX score .
A business ’ D & B PAYDEX grudge is used much like an individual ’ mho FICO score. It helps lenders, vendors and suppliers determine whether to approve you for finance and on what terms. typically, the better the sexual conquest, the more generous the terms extended. This can save your business money and give you more time to pay for supplies or services, leveling out cash flow .
In order to establish a PAYDEX sexual conquest, you ’ ll need a Dun & Bradstreet number, or a DUNS count .
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How is my PAYDEX score calculated?
To determine your occupation ’ south PAYDEX score, Dun & Bradstreet gathers data from the suppliers and vendors with which you do business over a wind 12-month period. Each supplier/vendor is considered a tradeline account, and the payments you make to that supplier/vendor is considered a payment have. According to Dun & Bradstreet, two tradelines with at least three recognition experiences are needed for a PAYDEX seduce ; however, in Nav ’ s have, business owners need at least three tradelines reported to create a score .
Dun & Bradstreet analyzes the punctuality of your payments against the terms of sale for each payment feel. so, the fast you pay your bills, the better your score .
PAYDEX marking is dollar-weighted, which means that each requital experience is weighted in terms of the number of transactions and the overall dollar value of those transactions. That means your transactions with your IT seller, with whom you spend thousands of dollars monthly, comprise a greater percentage of your D & B PAYDEX score than your transactions with the carpet clean who comes out to steam your rugs annually for a few hundred dollars, for exercise .
It ’ sulfur important to note that a Dun & Bradstreet PAYDEX score of 100 does not indicate that a business has made on time payments — in fact, it indicates that a business has systematically paid suppliers 30 days in progress. here ’ s a breakdown of what your dun and Bradstreet total means :
|100||Payment comes 30 days sooner than terms|
|90||Payment comes 20 days sooner than terms|
|80||Payment comes on terms|
|70||Payment comes 15 days beyond terms|
|60||Payment comes 22 days beyond terms|
|50||Payment comes 30 days beyond terms|
|40||Payment comes 60 days beyond terms|
|30||Payment comes 90 days beyond terms|
|20||Payment comes 120 days beyond terms|
|1 – 19||Payment comes over 120 days beyond terms|
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How is my PAYDEX score used?
PAYDEX is chiefly used by vendors and suppliers to judge your business when determining what terms to extend on craft credit ( for example, final 30, net 60, etc. ) This is significant because having more clock to pay your bills can help you better manage cash menstruation .
Lenders and creditors can besides consider your PAYDEX score before extending lines of credit or loans to your business. You should aim to maintain a PAYDEX score of 75 or higher to ensure qualification for these types of finance .
How can I improve my D&B PAYDEX score?
Since your PAYDEX seduce is based entirely on the promptness of your payments to vendors and suppliers, the only way to improve it is to make certain you are paying on time. Remember : paying on time will lone earn you a score of 80. For a perfective PAYDEX grade of 100, you need to pay early .
You should besides make indisputable you have at least three open tradelines to generate a PAYDEX score on your business. Having no PAYDEX score is just vitamin a bad as having a low one .
Want to see your PAYDEX score and start improving it? Nav lets you check your Dun & Bradstreet PAYDEX rating online, for free (no credit card required). You ’ ll besides get tips and insights to make your sexual conquest strong, so you can negotiate better seller terms, save money and more easily manage cash flow .
This article was in the first place written on October 17, 2019 and updated on January 3, 2022 .
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