What is a Paydex Score?  And How is it Related to Small Business Credit?

 A Paydex score is a number from Dun & Bradstreet (DNB) that is put together as a part of their reports on your small business which plays an important role in determining whether and how other businesses deal with yours. It will affect a commercial business loan. It is a dollar-weighted average of how long it takes you to pay your bills.

The Paydex score ranges all the way up to a score of 100, with 90-100 being the best range of scores, indicating that you pay your bills early. A Paydex score in the 80s indicates that your bills are generally paid on time. Anything in the 70s or below will indicate that your small business is frequently late in paying its bills. Keep in mind that this is an average of all of your transactions that are reported to DNB.

For example, if you are late on one bill, but pay another bill early, your Paydex score may average out in to the 80s, if both those bills were for equal amounts. If you pay a large bill late and a small bill early, your Paydex score will go up, but not as much as in the previous example. Paying a small bill late and a large bill early, conversely, will cause your Paydex score to raise more. The best way to raise this Paydex score is to frequently pay all of your bills early, if possible.

This Paydex score clearly has a significant impact on your overall credit image to potential lenders and other businesses you may be working with. The reason for this is that it is an indicator of how your small business pays its bills. A small business with a low Paydex score is, on average, usually late with its bills and is less likely to be approved for a commercial business loan or another credit-based arrangement. On the other hand, a small business with a high Paydex score pays most of its bills on time, or even early, which is an obvious advantage to anyone looking to do business with you or grant you a commercial business loan.

Basically, a higher Paydex score indicates that your small business is very reliable and indicates lower risk in extending, for example, a line of credit or a lease, giving you a better chance of obtaining those, and other financial arrangements when your small business needs them. Please contact us for more information about Dun & Bradstreet (DNB), Paydex scores and commercial business loans.