If you own a business, you may have heard of something called a Paydex score. But what is a Paydex score, and why does it matter for your business? If you want to get financing from a financial institution or plan on working with vendors and service providers, a Paydex score is a crucial piece of the puzzle. It indicates your financial health and is a good indicator of your reliability.

What is a Paydex score?

A Paydex score is a business credit score, similar to your own personal credit score. It is issued by Dun and Bradstreet and represents how likely it is that your business will pay vendors and suppliers on time. While your personal credit score ranges from 0 to 850, your Paydex score is between 0 and 100.

A higher Paydex score indicates you are more likely to pay bills on time or even in advance. If your score is above 80, it means that, based on your payment history, you are considered to be low risk.

What factors impact your Paydex score?

Unlike your personal credit score, which is based on a variety of factors, your business Paydex score is dependent solely on your Trade References.

Trade References are your payment experiences with vendors and suppliers that are registered with Dun and Bradstreet by the vendors and suppliers themselves. It’s important to note that Dun and Bradstreet does not consider credit card payments to be Trade References.

To properly calculate your Paydex score, Dun and Bradstreet recommends you have a minimum of four Trade References on record. Only transactions from the previous two years are used when determining your business score.

Recent, larger credit matters more

Since the Paydex score reflects the current likelihood of your business making payments on time, recent Trade References carry more weight than older ones.

The size of payments made or owed to vendors and suppliers is an important factor as well, with larger payments having a greater impact than smaller ones. For example, being late on a $5,000 payment will have a much greater effect on your Paydex score than being late on a $300 payment.

Improving your Paydex score

The primary way to improve your score is to make payments in a timely manner. Negotiating longer terms with vendors and suppliers can be very helpful, as it makes it easier for you to make payments on time or early. For example, if you only have a 10-day window to make a payment, you may have issues if finances get tight, resulting in a late payment and a negative experience on your record.

How is Paydex score used?

The Paydex score is used by a variety of people and organizations to help them decide whether they want to work with your business. Financial institutions will use your score to determine whether to lend you money and what terms to give you.

Insurance companies examine your score when deciding premium amounts for your business. Landlords may check your score when deciding whether to accept you as a tenant. And, of course, suppliers and vendors will look at your score before agreeing to engage with your business.

With these things in mind, it is in the best interest of your business to keep your Paydex score as high as possible. A low score can hamper your growth and make it difficult for you to do business.

What do different Paydex scores mean?

The lower a business Paydex score, the higher the risk of late payment it represents to a lender.

  • 80-100: Low risk
  • 50-79: Medium risk
  • 0-49: High risk

The following table shows you what each Paydex score means in terms of your payment history. Keep in mind, you don’t need to have an absolutely flawless score. That would mean you pay all your bills 30 days in advance, which few, if any, businesses can actually do. As long as you keep your score at 80 or above, it shows vendors and suppliers that you pay your bills on time.

Paydex Score Average days to make payment Paydex score Average days to make payment
100 30 days early 59 23 days late
99 29 days early 58 24 days late
98 28 days early 57 25 days late
97 27 days early 56 26 days late
96 26 days early 55 26 days late
95 25 days early 54 27 days late
94 24 days early 53 28 days late
93 23 days early 52 29 days late
92 22 days early 51 29 days late
91 21 days early 50 30 days late
90 20 days early 49 33 days late
89 18 days early 48 36 days late
88 16 days early 47 39 days late
87 14 days early 46 42 days late
86 12 days early 45 45 days late
85 10 days early 44 48 days late
84 8 days early 43 51 days late
83 6 days early 42 54 days late
82 4 days early 41 57 days late
81 2 days early 40 60 days late
80 Pays on time 39 63 days late
79 2 days late 38 66 days late
78 3 days late 37 69 days late
77 5 days late 36 72 days late
76 6 days late 35 75 days late
75 8 days late 34 78 days late
74 9 days late 33 81 days late
73 11 days late 32 84 days late
72 12 days late 31 87 days late
71 14 days late 30 90 days late
70 15 days late 29 93 days late
69 16 days late 28 96 days late
68 17 days late 27 99 days late
67 18 days late 26 102 days late
66 19 days late 25 105 days late
65 19 days late 24 108 days late
64 19 days late 23 111 days late
63 20 days late 22 114 days late
62 21 days late 21 117 days late
61 22 days late 20 120 days late
60 22 days late 1 – 19 Over 120 days late

The bottom line

If you want to run a successful business, you need to keep tabs on your Paydex score. It influences everything from securing financing to obtaining supplies to insurance rates.

The good news is that if your business credit score is lower than you’d like, you can work to raise it. Making payments on time or early, especially on your business credit card, will move the needle in the right direction.