What is a PAYDEX score?

PAYDEX is a business credit score generated by Dun & Bradstreet (D&B). The D&B PAYDEX score ranges from 1 to 100, assessing a business’s creditworthiness based on how promptly the business has been shown to pay creditors or vendors. Lenders, partners, creditors, and potential clients can use it to decipher whether they want to extend financing or work with a business. If the PAYDEX is low, it would be a red flag to the viewer that the company may not be financially stable. This could mean higher rates are a complete rejection.

What is a good D&B PAYDEX score?

A PAYDEX score of 80 or higher is widely considered to be in the “very good” range. A score of 80 indicates that, on average, a business pays its debts on the exact day they are due. Scores higher than 80 indicate early repayment. We have never seen a PAYDEX score over 80 in our 30 years of analyzing and reviewing them. The best possible PAYDEX score is 100, indicating that a business has a perfect repayment history, consistently paying off debts 30 days early. A score of 1 represents the highest risk of late payment, as it indicates that a business has consistently fallen over 120 days past due repaying debts.

How are D&B PAYDEX scores calculated?

For a business PAYDEX score to be calculated there must be at least two active tradelines reported to D&B. If you do not have enough vendor tradelines reported the PAYDEX will remain unscored. Not all vendors/creditors report to D&B. A business can have thousands of vendors/creditors but if none of them report to D&B then the PAYDEX can remain unscored. The PAYDEX score is impacted more by the higher debt vendor payment experience. If a company has 5 vendors reporting tradelines and the vendor showing the most debt owed is delinquent, the scores will drop dramatically. If the lowest debt vendor is delinquent the impact will be less dramatic to the score.

A PAYDEX score is calculated based on a business’s past payment performance. Vendors that report to Dun & Bradstreet (D&B) provide payment records known as Trade References. These records include things like slow pays, overdue debts or bills sent to collections as well as on-time or early payments. D&B may factor Trade References from up to 875 partner businesses when calculating a PAYDEX score.

Who checks a business’s PAYDEX score?

Suppliers, landlords, partners, customers, insurance companies, lenders or banks regularly check a business’s PAYDEX scores when assessing a business. PAYDEX scores generated in a business’s D&B Report are valuable to anyone assessing the risk of defaults/business failure before doing business with an organization. Anyone can look up a business’s PAYDEX score using the business’s DUNS number.

What is a DUNS number?

The Data Universal Numbering System, also known as DUNS or D-U-N-S, is D&B’s proprietary 9-digit identifiers for each business in their database. DUNS numbers are provided free of charge and are assigned to over 300 million businesses worldwide.

How do PAYDEX scores affect businesses?

Business credit scores like PAYDEX affect organizations similarly to how personal credit scores affect individuals. Among other benefits, a good PAYDEX business credit score can increase a business’s ability to secure favorable purchasing terms, get business loans/lines, gain approvals for a leases/equipment, and approvals for partnerships/bids. A poor PAYDEX score can result in increased business costs, limited flexibility of payment terms with venders, higher insurance premiums, weakened borrowing power, tenancy rejections, loss of new accounts and partnerships, or other issues.

How do I get a PAYDEX score?

If your business does not have a PAYDEX score already, you will need to apply for a DUNS number from D&B. Once your business has a DUNS number and at least two suppliers have reported at least three total payments, a PAYDEX score will be generated.

How do I view my business’s PAYDEX score?

You can view your PAYDEX score by purchasing a business credit report from Dun & Bradstreet. You can also access it through one of D&B’s various subscription packages. A free CreditSignal subscription will alert you to changes in your business credit scores and provide a very basic overview of activity in your business credit file. More information is provided in premium subscription packages, but we recommend consulting with one of our qualified business credit professionals before paying for a subscription service.

How can I improve my business’s PAYDEX score?

To bring your business’s PAYDEX score up, you will need to pay off debts on time or early. Because it is a dollar-weighted average, the bigger the invoice and the earlier the repayment, the better.

In practice, however, it may not be so simple. A low PAYDEX score can make it difficult for a business to get financing on large purchases. There is also no guarantee that the supplier or vendor will report your business’s repayment to Dun & Bradstreet. D&B offers a paid subscription that allows businesses to submit their own repayments, but if they are not able to verify the payments, your business will receive no benefit.

Instead of risking money trying to repair your business credit on your own, we recommend speaking to one of our business credit repair experts. The business credit professionals at North Shore Advisory come with over 30 years of experience and are here to fix your business credit with methods that work. Get in touch today to set your PAYDEX score on the right track.