A look at the Paydex index

What is a paydex score? As a business a paydex score is one of the most important things to know. A paydex score is equlivant to your personal FICO score or personal credit score. A paydex score can make the difference when acquiring loans for the company. If you do not manage your paydex score, it can cost your business.

The Paydex index is called the "D&B Paydex" score. It is a number of how your company pays its bills over the course of the last year and is reported to the D&B by various vendors. The D&B Paydex score is rated on a scale of 1 to 100, the higher the number, the better payment performance your company has.

Knowing how to increase your Paydex score or knowing how to establish one take a few steps.



• Know the payment patterns. A payment pattern is considered an anticipatory payment plan. Paying your bill prior to the invoice being sent indicates your company plans ahead and pays ahead of time. This is the best responsibility your company can display to get a high score.


•  Know what the Paydex score means. If your company has a paydex score of 70, do you know what it means? Using the D&B key will help you interpret what the Paydex scores mean.

Gaining credit for your company will also help your Paydex score. Watch out with how many lines of credit you have open as they can lower your Paydex score. It is best to consult a company who does the research on the best lines of credit for your business prior to just signing an agreement. If your company cannot pay back the required payment by the due date, do not make a purchase. This will be considered financial abuse and will lower your Paydex score.

Start tracking your score by contacting D&B they will send you a copy of their report. The D&B report is useful for all businesses and helps your company to take a look at existing accounts and where the largest amount of money is being spent. The D&B Comprehensive Report contains key information about a company, to help your organization:



• Identify companies that have slow payment experience or a company that may be undergoing financial stress.


•  Use Business Ratios to help make sure a company has enough assets to pay you.


•  Compare a company to others in the same industry locally or nationally.


•  Look into the business background of a company's owners.


•  Look at how many times a company has moved and where - and even how well it functioned under natural disasters or fires.


•  Review public records in D&B's information base to see if any suits have been brought against a potential client.

Just like your personal credit score your Paydex score is very important to your business's growth and future. Careful financial decisions will greatly impact the score and allow you to gain loans for your company.

If you are new to the D&B paydex score, you may want to visit their website. D&B has a lot of information for businesses who are new to the Paydex score. Hiring someone else to do the paperwork is helpful, unless you know how the system works. You may have a Paydex number, but you will still need to figure out how to convert the number into working capital or a business loan. Business credit is still quite different from personal credit and without proper knowledge, you won't get too far. Access to capital can be a significant competitive advantage for your business and a qualified consultant with connections to small business lending companies and alternative funding companies should make you more effective with less time, effort and frustration on your part.

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Categories: Managing Money,

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