Dun and Bradstreet Scores

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The need for successful privately held companies to establish a Dunn and Bradstreet number and then work to build up their DNB credit score is essential if you are seeking to do business with larger companies or institutional clients. DNB scores can be effective third party validators.

Generally speaking, companies obtain a Duns number either because they are required to in order to do business with the government or some other organization or institution. A company can fast track and pay a fee and have a Duns number within a week or they can apply for one for free and expect to receive the Duns number within 5 weeks. Companies seeking to do business with the Federal government can not apply or move to the next level until they have registered and have a Duns number.

Rather than view this process as an annoyance, privately held companies should recognize that, with some effort and some nominal investment, they could use the DNB to showcase their company’s financial strength and capacity, without publicly divulging all of their personal financial data.

Publicly traded companies don’t have this issue because publicly traded companies are required, pursuant to the SEC guidelines and regulations, to disclose excruciating details regarding their finances, including audited financial statements. Third parties or businesses interested in conducting business with a publicly traded company can easily access and analyze the publicly available financial detail. This transparency enables potential business clients or vendors to can confirm the financial stability and wherewithal of a publicly held company before doing business with publicly traded companies.

Privately held companies, on the other hand, are not required and seldom disclose their financial standings and tend to view their private financial information as proprietary. Having represented growing companies that are looking to expand their vendors to include Fortune 1,000 companies, the DNB credit ratings have become a key tool for privately held companies to articulate their financial strength without publicly disclosing their audited financial statements.

For example, I represent a national company who continues to grow exponentially due to the incredible customer service. Word of mouth has been an excellent source of business and has led them to larger companies and referrals interested in doing business with them. Many of the directors and managers within these larger companies view the DNB rating for third party validation, particularly when the larger company does not have access up front to the financial data of privately held companies. The Dunn and Bradstreet rating’s is comprised of several factors. Two of those factors are controlled by the client’s performance and are the most critical to the DNB ratings/score. The Paydex score is a reflection of the company’s ability to pay its trade creditors in a timely fashion. A score of 80 is a perfect score. In the current example, Company A never really used the DNB rating nor did they focus on ensuring it had accurate up to date information. In fact they were pretty surprised when I briefed them on what’s publicly displayed about their company. If a manager of a potential business source viewed their DNB report, it would appear the Company A was still a small mom and pop type business because the information on DNB regarding Company A’s was essentially out of date and did not even remotely reflect Company A’s tremendous expansion, growth and successes over the past several years.

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