Sep 03 2018

Building Your Corporate Credit

Consumers have Trans-Union, Equifax, and Experian; businesses had multiple reporting agencies as well. However, Dun and Bradstreet’s Paydex score is the most important credit indication for a company. A good paydex score is essential for your long-term and short-term business growth even if you don’t want to get credit cards or cash lines as part of your corporate credit. A good Paydex score can help you negotiate terms for inventory, obtain a lease on a property, or obtain a non-recourse business loan for the purchase of property or vehicles. Dun and Bradstreet make Paydex scores available to the public, basing them on how quickly a business pays its bills. This score will have a greater impact on your ability to obtain corporate credit than any other factor.


Some tips by our experts at CL King and Associates to help you make sure your score helps your business instead of hurting it:


1) Pay all your bills on time. Dun and Bradstreet uses data from a variety of sources, including your internet, utility, lease, and other payments. A great many companies report their receivables experiences, so some of your suppliers may be involved as well. Business credit is different than personal credit scoring in that a business credit score is related to ongoing expenses to a much greater extent than debt and income, which is why it can be affected negatively, for example, by a late electric bill.


2) Keep on top of your score. You can use various software programs that will keep you up to date. You should aim for a Paydex score higher than 70 if you’re looking for continual increases in available corporate credit. As a rule of thumb, multiply a corporate score by ten to get the equivalent personal score. A score of 60, therefore, would equate to a personal score of about 600.


3) Building a good Paydex is far easier than building a personal credit score. Simply pay every bill on time. To really ramp up your score pay bills before you even get the invoice. That can help you ramp your score up to the maximum Dun and Bradstreet will allow, a perfect 100.


4) Apply for corporate credit with vendors that report to Dun and Bradstreet. Dell Computers has relatively easy qualifications and reports regularly. You can also get business accounts from office supply companies such as Staples. Start out by buying smaller items on credit and paying the invoices early. Always try to negotiate net 30 terms with vendors and pay early. When you’ve developed a good relationship with them, ask them to report your good payment history to Dun and Bradstreet.


Keeping on top of your Paydex score will keep you on top of the corporate credit available to your company. Do your best to consider the credit implications of all you do. Don’t forget that a corporate credit score not only equates to ten times the number in terms of a personal score. In general, corporate credit is ten times more available to a company that indicates it is responsible with payment.


To learn more, consult with the experts at CL King and Associates. CL King provides investment banking, equity research, sales and trading, and investor services to corporations and institutions. CL King’s Corporate Services unit offers specialized services and objective advice to help corporate clients achieve flawless execution directly in the capital markets. You can call at 518.447.8050


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