Managing risk can be critical to the success of most companies, and that’s why many banks, vendors, suppliers and lessors help mitigate their risk by using the D&B PAYDEX® and other D&B scores to evaluate and assess businesses. A business with a track record of on-time payments can represent a lower credit risk than one that consistently makes late or incomplete payments, and the former will usually receive a higher PAYDEX® score.
What Is the PAYDEX® Score?
D&B provides that the PAYDEX Score is a unique, dollar-weighted indicator of a business’s payment performance, based on the total number of payment experiences in a company’s D&B business credit file. The PAYDEX® score ranges from 1-100, with better payment performance indicated by a higher score.
What Factors Can Impact Your PAYDEX®?
D&B® collects up to 875 payment experiences from companies that have worked with the business in question, and using these payment experiences, generates the PAYDEX score. It’s worth noting that 80 representative payment experiences can be reported in a D&B® business credit report, which includes the PAYDEX and other scores. Each experience represents a different supplier or vendor and can show how a company has paid its invoices relative to the terms of credit it has been offered.
How PAYDEX® Can Impact Your Business
Suppliers, banks, lessors, landlords and potential customers all can use PAYDEX® for a variety of reasons, and risk reduction can definitely be one of them. The PAYDEX® score can help a company decide to accept or decline a sale, set credit terms, open or deny an account, and determine interest rates and insurance premiums. PAYDEX® can play an essential role in risk assessment, helping to determine whether a company can be considered a stable supplier.
PAYDEX® may also be used when deciding whether or not an account should be forwarded to third-party debt collection. Companies with higher PAYDEX® scores may get leeway from partners, as there might be more confidence in their financial stability. It’s important to note that D&B requires a business to be listed in its credit database and have at least four payment experiences on file before generating a PAYDEX®.
Impacting Your PAYDEX®
You can help impact your business’s PAYDEX® by addressing the areas that can most influence the score, such as paying all invoices in a timely manner, adding additional payment experiences to your D&B® business credit report and logging into Company Update to make sure all business information is accurate and up-to-date. Early payment of invoices may also bring benefits, as PAYDEX® scores between 80-100 are reserved for businesses that pay early, among other factors. Businesses scoring 100 typically pay bills an average of 30 days before the due date.
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*Trade References will be added subject to D&B® verification and acceptance. Please see http://www. dandb.com/glossary/trade-references/ for eligibility, process and other information regarding Trade References.