How to Build Corporate Credit Fast Using an 80 Paydex Program
The corporation Dun and Bradstreet assigns a special credit score to a business called a Paydex. That score rates the likelihood of any given business to repay vendors, suppliers, and creditors in a timely manner. Unlike personal credit scores which range from 0 to 850, a Paydex score ranges from 0 to 100. The higher the number, the better your chances of getting an unsecured business line of credit to pay for expansions, employees, supplies, and other business-related expenses. By responsibly utilizing an 80 Paydex program, you essentially put your business in a low-risk category. An 80 or better score indicates that your payment history is timely and therefore has a decreased chance of being repaid late.
Understanding How the Paydex Is Used by Your Business:
Your personal credit rating is used primarily to measure the financial hazard you present to lenders, or lack thereof. However, a Paydex score is used in several more ways. For example, it can affect the premiums and APRs that your business is required to pay on credit cards and bank loans. An 80 Paydex score lowers the interest rates charged to your company and puts your business in line to receive better unsecured funding products.
Another way that your Paydex score is used typically doesn’t apply to consumers, and that’s when it comes to borrowing from vendors. Vendors deliver goods and services before invoicing the business and then receive payment for those goods and services after the delivery. As a result, vendors must assume a certain level of risk that they won’t be paid. So, the Paydex score of a business is a useful metric for determining whether a client will leave a vendor hanging. Poor Paydex scores make suppliers naturally reluctant to do business, and may ultimately limit the size and scope of goods and services they’re willing to part with before being paid.
Knowing how to build corporate credit fast by establishing an attractive business credit Paydex score is the only way to succeed in this highly competitive economy. It’s important that you know what goes into a Paydex score. Additionally, it’s vital to be aware of how your business spending habits affect that.
How a Paydex Score Is Calculated:
To get corporate credit and use it as intended, you must understand how a Paydex score is determined. Put simply, your score is calculated based on a history of trade references regarding your business. Instead of looking solely at your business’s history of financing from lenders, Dun and Bradstreet uses a company’s various payment histories with the vendors and suppliers it works with. As such, Dun and Bradstreet recommends that a business have at least four separate trade references on file to accurately calculate a Paydex score.
Although most trade references remain on a business credit report for quite some time, only those reported within the last 2 years are used to calculate a Paydex score. Therefore, it is often difficult for new businesses to establish corporate credit without a workable strategy. It is in a company’s best interest to maintain a consistent flow of trade references and have them reported in a timely manner. Unfortunately, credit card payments don’t count as a trade experience.
What Qualifies as a Trade Experience?
Businesses often face the challenge of locating enough vendors to meet the minimum trade experiences needed to receive a Paydex score. In fact, some smaller vendors don’t report their transactions to Duns and Bradstreet without provocation. This is generally the underlying issue for businesses in the service industry, because they don’t work with many suppliers. Tech startups have this problem as well, since they usually have very few outside needs. For businesses like that, finding trade experiences means knowing where to look.
One way to increase trade experience is to use accountants, lawyers, and landlords as references, but only if those relationships are billed through invoices and have relative payment terms. Additionally, setting up a business account with a major office supply store can help, as they usually report trade accounts directly to Dun and Bradstreet automatically. Then again, having plenty of trade experience won’t matter if you don’t have an active account with Dun and Bradstreet to begin with.
How to Get Your Paydex Score:
To get a Paydex score at all, your business must be registered with Dun and Bradstreet with a valid DUNS number. Although DUNS numbers are assigned to each location of your business, your Paydex score is assigned to the headquarters. So, if your company has numerous offices that work with suppliers separately, you should always use the primary DUNS number with vendors. This will help you get a Paydex score by generating plenty of trade experience.
Tips to Improve Your Paydex Score Fast:
- Establishing a business credit Paydex score is only half the battle. You must know how to manage it and improve upon it when necessary. A Paydex rating is designed to measure a company’s financial responsiveness, so it’s vital to maintain high scores within the company as a whole. Businesses should negotiate longer payment terms with each vendor to increase the probability of on-time payments and ensure that the company’s trade experiences reflect positively on the Paydex.
- Keep in mind also that only references from the past two years have a direct effect on your score. Recent trade experiences are thus more valuable and will have a greater impact. Furthermore, the relative size of each unsecured business line of credit weighs heavily on your overall rating. As such, payment histories on larger accounts will affect your Paydex more than the payment histories on small accounts. For example, paying a $20,000 bill late will affect your Paydex score a lot more than paying off a smaller $500 bill would. Choose your battles wisely or work with a team of professionals who can help you get your Paydex to 80 fast.
Moreover, understanding what each of the values on your Paydex score means is an important factor to properly managing and improving your rating. While businesses shouldn’t be concerned about having a perfect score, business owners should do everything within their power to adequately elevate their rating through a feasible 80 Paydex program. To get enough corporate credit to successfully run and improve your business, it’s vital that you set out to establish business credit as soon as possible.
This article is for Grand Teton Professionals for Corporate Cash Credit. For Credit Repair Solutions and Support, please Contact Us at 203-528-0587 or email us at Support@CorporateCashCredit.com. For Media Relations, please Contact: Misty.Burrell@GrandTetonProfessionals.com.
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Secondard Kw : Themes: corporate credit rating, how to get corporate credit, establishing business credit for new businesses, corporate credit card, small business credit card offers, paydex, payment terms