PAYDEX SCORE
WHAT IS A PAYDEX SCORE?
A PAYDEX Score is a business credit score provided by Dun & Bradstreet, designed to evaluate how likely a business is to pay its vendors and suppliers on time. Here's a brief overview:✔ Range:
✔ The PAYDEX Score ranges from 0 to 100
✔ Higher Scores: A higher score indicates a greater likelihood of paying bills on time or even in advance
✔ A score above 80 signals that the business is a low risk for creditors, lenders, and insurers.
✔ Impact:
✔ The score can influence several business aspects, including:
✔ Loan approvals
✔ Insurance premiums
✔ Credit terms
✔ Acceptance by commercial landlords
Vendors, suppliers, landlords, and lenders can access a business's PAYDEX Score by purchasing a company report from Dun & Bradstreet. This access allows them to make informed decisions regarding the financial reliability of the business.
WHAT FACTORS IMPACT YOUR PAYDEX SCORE?
Several factors can impact your PAYDEX Score, including but not limited to:
✔ Payment History: The primary factor is how promptly you pay your bills. Early or on-time payments positively influence your score, while late payments have a negative impact.
✔ Payment Terms: The agreed-upon payment terms with your vendors and suppliers also play a role. Consistently meeting or exceeding these terms will help maintain a high score.
✔ Outstanding Balances: The amount of outstanding debt and how it's managed can affect your score. Keeping outstanding balances low and paying them off promptly is beneficial.
✔ Credit Utilization: Similar to personal credit scores, the ratio of credit used to credit available can impact your PAYDEX Score. Lower credit utilization ratios are generally better.
✔ Number of Trade Experiences: The number and quality of trade experiences reported to Dun & Bradstreet. A greater number of positive trade experiences can enhance your score.
✔ Business Age and Size: Older, more established businesses with a track record of timely payments are often viewed more favorably.
✔ Industry Risk: The inherent risk associated with your industry can influence your score. Some industries are considered higher risk, which can impact your PAYDEX Score.
✔ Financial Stability: Overall financial stability and performance of your business, including cash flow and profitability, can affect your score.
Maintaining good relationships with vendors and suppliers, consistently paying on time, and managing your business's financial health are key strategies for achieving and maintaining a high PAYDEX Score.
