By Marco Carbajo
Your business credit profile and D&B® scores and ratings are updated based on a range of primary and secondary sources that includes payment history, trade lines, and outstanding balances, among other things. It can be essential to keep a close eye on your business credit file, and to watch out for changes that might affect your ability qualify for loans, to negotiate terms and conditions, and to partner with other companies.
While many factors can impact your company’s scores and ratings, one component that can be more intuitive than others is payment history. Payment history, also known as payment performance, is the track record your company establishes by either paying or not paying its invoices on time.
Payment history is reflected in your D&B business credit profile. Although not all creditors and suppliers report payment history to D&B by default, your business credit profile can reflect payment history from accounts your company has had with creditors, suppliers, lenders, and banks which report to D&B.
Improving Payment History
Here are two ways to help improve your company’s payment history:
Pay before your due date – When a company pays its invoices ahead of the due date, this can have a much bigger impact on its business credit scores, specifically the PAYDEX® score. The PAYDEX score is dollar-weighted, and paying bigger bills before they’re due may have an impact on the score. If you can’t pay before your due date, make sure you’re at least paying on time. Late payments may hurt your business credit profile.
Add positive trade references* – If your business has existing positive payment experiences, or trade references, not automatically reported on its profile, then consider trying to have them added to your report.
As long as your business is actively maintaining a positive payment history, your company may be able to create a favorable business credit profile. For the most part, D&B requires a minimum number of trade experiences to generate a score; for example, at least three trade experiences are required to generate a PAYDEX Score.
Photo Credit: RecreaHQ, Flickr
*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.