| Paydex is a system developed by financial | | | | Score to determine the creditworthiness of |
| reporting giant Dun and Bradstreet (D&B) to | | | | individual businesses. Low Paydex Scores will |
| provide reports to credit agencies, banks and | | | | usually mean limited access to business credit and |
| financial institutions, as well as other businesses on | | | | almost always result in higher interest rates and |
| the payment record of other companies. Dun and | | | | higher costs to the company in question. On the |
| Bradstreet compiles this information from data | | | | other hand a higher Paydex Score is seen as an |
| collected through banks and credit agencies and | | | | attractive element of a business portfolio and can |
| individual businesses who report on the payment | | | | often lead to expanded business credit |
| habits of their dealers, distributors and suppliers. | | | | opportunities and the most advantageous lines of |
| This information is then recorded in Dun and | | | | business credit. |
| Bradstreet's massive data bank which produces a | | | | In order to maintain a high Paydex Score |
| score on how well each company performs in | | | | companies must be vigilant in making payments |
| paying its bills. This score is called a Paydex Score. | | | | to suppliers and other creditors within the agreed |
| The Paydex system is a dollar weighted numerical | | | | upon terms of payment. There may often be |
| system and a higher Paydex Score means that a | | | | situations when it is not possible to meet these |
| company almost always pays their bills on time to | | | | deadlines but businesses are encouraged to |
| suppliers and other businesses. A lower Paydex | | | | contact their creditors and make alternative |
| score means that a company is more often late | | | | arrangements if they want to keep their |
| in making these payments. | | | | favorable Paydex Score and business credit rating. |
| The Paydex Score is regarded by many in the | | | | If a business has difficulties that lead to a poor |
| business community as not a sign of being good | | | | Paydex Score they can take actions to have Dun |
| corporate customers, but even more as an | | | | and Bradstreet review their file and their Paydex |
| indicator of the management and financial health | | | | Score. That includes making arrangements with |
| of the business. Companies with a low Paydex | | | | creditors of course, but it can also help to provide |
| Score often have difficulty making supply and | | | | letters of reference from satisfied customers and |
| credit arrangements with other businesses and in | | | | suppliers who are prepared to signify their |
| some cases have to pre-pay all or part of their | | | | satisfaction with the payment capacity of the |
| orders in advance. That makes it very difficult to | | | | business. |
| operate in many areas of business and can even | | | | The best way to keep a high Paydex Score is of |
| cause a business to go under. | | | | course to pay all outstanding bills on time and |
| Banks, other lending institutions, and credit | | | | within the allowed time frame. |
| reporting agencies rely heavily on the Paydex | | | | |