What is Paydex, and why is it important to your business finance?
What is a paydex score? As a business a paydex score is one of the most important things to know. A paydex score is equal 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 "Dunn and Bradstreet 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 Dunn and Bradstreet by various vendors. The Dunn and Bradstreet 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.
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.
If you are new to the Dunn and Bradstreet paydex score, you may want to visit their website. Dunn and Bradstreet 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.
If you find yourself getting behind with your business finance, contact your lender immediately. The last thing you need is to have a red flag on your business credit score and your Paydex score to drop.
Banks, other lending institutions, and credit reporting agencies rely heavily on the Paydex Score to determine the creditworthiness of individual businesses. Low Paydex Scores will usually mean limited access to business credit and almost always result in higher interest rates and higher costs to the company in question.
A higher Paydex Score is seen as an attractive element of a business portfolio and can often lead to expanded business credit opportunities and the most advantageous lines of business credit.
Make smart business finance decisions and don't get in over your head in debt. Look into hiring a financial consultant to help you make proper decisions regarding your Paydex score. Knowledge is the key with practically everything and you want to be fully prepared when it comes to your business finances.