As a small business owner, having enough capital to grow and expand your business can be difficult, which is why many apply for credit. While your business might be bustling, you might need help with funding in the future, which is when you may need a D-U-N-S Number. In this guide, we'll explain the ins and outs of a D-U-N-S Number, otherwise referred to as a D&B Number. Then, we'll discuss when a business should register for a D&B Number and how to get started.
What Is a D-U-N-S Number?
The D-U-N-S Number, which stands for Data Universal Numbering System, is a nine-digit identifier for businesses. Dun & Bradstreet (DNB) issues this unique number and is often used by potential business partners and lenders when they are looking into the financial health and reliability of a business. The D-U-N-S Number is a unique identifier, meaning that it never expires and will never be reused for another business.
Additionally, the D-U-N-S Number is helpful in maintaining an accurate database of various businesses throughout the world. More than 225 million companies have profiles within the database, providing individuals with important business information.
If you are a small business owner that wants to conduct business with another party or you need a business credit history — you need a D&B number. Though you may be eligible for a personal loan from a bank, it is not a wise idea to take your personal money to support your business and keep it running. For this reason, business owners need another method of proving their credit history.
The DUNS number creates a credit report for any business that has completed their profile and used the number to conduct business. To begin creating a credit history as a business owner, you will need to start using your D-U-N-S Number. Although registering for the D&B number is a good first step, it will not be enough to start building a credit history. Instead, you will need to conduct business with another company that has a registered DUNS number so that they can report your payment history to DNB.
Here's an example of how it works:
- A business registers for the DUNS number through Dun & Bradstreet.
- They purchase inventory from a vendor that also has a DUNS number.
- The vendor reports the business's credit history, payments, and time in which they've conducted business with the company to Dun & Bradstreet.
- Over time, the business establishes their credit history and overall credit worthiness.
- As the business expands, they go to a bank to apply for credit cards and loans using their DUNS number. Because they used the DUNS number, the business owners do not have to risk their personal credit.
Why Should Your Business Register for a D-U-N-S Number?
Curious if you should register for a DUNS number? If you'd like to build a credit history for your business, you'll want to register for a DUNS number. Even if you do not need any type of credit for your company now, you may want to register for a D&B number and start building credit history for your business if you need financial assistance down the line. Continue reading to learn about the benefits of registering for a D&B number.
Conduct Business With the U.S. Government and International Businesses
Throughout the world, businesses and government agencies alike assess the risk of working with suppliers and partners. In many cases, the vetting process may require businesses to have a DUNS number before they can submit a bid. If you're hoping to win government contracts with the U.S. government or others abroad, it's important to establish credibility as soon as you realize this dream so you can begin building your PAYDEX score. Additionally, organizations use a DUNS number and PAYDEX to confirm the legitimacy of a company and reliability.
As mentioned, the DUNS number helps companies determine why they should work with you or how much money they should lend you. Aside from the more obvious financial implications of having a DUNS number and PAYDEX score, the DUNS number offers businesses legitimacy, which can be essential in working with important organizations. The D&B number provides individuals, companies, and lenders alike with access to your PAYDEX score and any suits, judgements, liens, and additional information regarding a business's credibility and trustworthiness.
Create iOS Apps
In order for an app to show up in the Apple App Store, you'll need to establish trustworthiness. Apple has standardized the approval process by requiring apple developers to use a DUNS number to create their account.
Monitor Your Business Credit Report
Once you have a registered D&B number, you can start monitoring your business credit report. Similarly to personal banking, it's important that you periodically check in on your business credit report to ensure the information is accurate. As long as you're on top of tracking your business credit report, you can easily correct any errors before investors, lenders, or potential customers come across it.
Attract Business Partners
In the event that you'd like to work with business partners in the future, it's wise to establish a business credit history. One of the many benefits of a DUNS number, is that you and potential business partners can check to see the financial stability and trustworthiness before jumping into agreements. As a business owner, you can also look into the credit history of potential clients before you make a commitment.
Become Eligible for an SSL Certificate
Secure websites are becoming more important than ever before as sophisticated hackers outsmart us. The SSL Certificate, a credential that empowers companies to secure their websites, can speed up the application process for businesses.
How Do Creditors Assess Creditworthiness?
Like a FICO credit score for your personal credit, the PAYDEX score tells lenders about your business's creditworthiness. Dun & Bradstreet created a credit scoring system, the PAYDEX score. The PAYDEX score was designed to inform potential lenders about your creditworthiness and the likeliness that your business will make payments on time. Your business's PAYDEX score can fall anywhere between 0 to 100, with a score of 80 to 100 being considered low risk.
According to Dun & Bradstreet, the PAYDEX score is calculated based on Trade References. When payments are made to Dun & Bradstreet by suppliers and vendors, payments are recorded into the database. Records include details about on time and early payments as well as overdue debts and bills that were sent to collections. To determine a business's PAYDEX score, Dun & Bradstreet factors in trade references from no more than 875 different businesses.
If you already have a D&B number and have business credit history, you can check your PAYDEX score by purchasing a credit report through Dun & Bradstreet. Some even recommend checking your competitor's scores and ratings to understand the financial health of other businesses in your industry.
Who Can Check Your Business PAYDEX Score?
Dun & Bradstreet allows anyone to purchase a business credit report. For this reason, anyone, including lenders, suppliers, potential customers, and landlords can purchase access to your PAYDEX score.
Dun & Bradstreet allows anyone to view your PAYDEX score to help individuals:
- Determine whether they'd like to do business with your company
- Set insurance premiums for your business
- Decide whether they would like to offer you a business loan
- Determine whether they'd like to rent space to your business
- Decide what your credit terms should be based on your business's level of financial risk to the lender
Registering for a D-U-N-S Number
To register for a DUNS number, you will need to provide a bit of information to Dun & Bradstreet. Luckily, the process is relatively straightforward and can be completed on the D&B website. Dun & Bradstreet has simplified the process by walking you through every step of the process on their site. Applying for your business DUNS number is free and takes about 30 business days, unless you'd like to expedite the process for a fee.
To apply for a DUNS number, you will need to provide this information:
- Legal name of the business
- Business's physical address and mailing address
- Owner's name
- Phone number
- Year in which the business was founded
- Business entity type (i.e., sole proprietorship, LLC, corporation, etc.)
- Number of employees within the business
Establish Financial Stability With Skynova
As a small business owner, it's essential to create financial stability, especially if you want to grow. Whether you plan to work with the U.S. government, foreign companies, or join exciting business ventures with business partners, you'll want to show your financial credibility.
Skynova can help you keep accurate records of your income, expenses, taxes, and payments to ensure you're on top of your financial well-being. Our software makes tracking expenses simple, helping you to avoid late payments which can damage your PAYDEX score and credibility. Visit our website today to get started with our accounting software.
Notice to the Reader
This article contains general information regarding the D-U-N-S number and may not apply to your specific situation. Always consult with a professional accountant to ensure you're meeting accounting standards.