Understanding the Paydex System

During the early years of operation as an independent trucker or while you are running a small fleet of trucks, it might seem appealing to take whatever business comes your way. But this is how some of the most difficult lessons are forcibly taught to a budding entrepreneur.

Although the companies that require your freight services may talk a good game, they may be less trustworthy when it comes to paying the bill for the loads that you have hauled for them. Few individual truckers or small fleet owners have the financial resources necessary to bear a substantial accumulation of open receivables, so it has the potential to sink a new endeavor.

Fortunately, there are resources available to help you to determine the risk associated with taking on a prospective client. These business credit scoring systems can help to separate the fast talk from the slow-walk and can help you to avoid making damaging business decisions that can be reasonably avoided. One of the most well-established and reputable indices is the Paydex score calculated by Dun & Bradstreet.

Interpreting a Paydex Score

One of the advantages of the Paydex formula is that it is incredibly simple, at least in terms of the factors that it considers. All that is assessed is whether a business makes payments to its creditors on time and pursuant to the terms agreed upon. The following represents a loose explanation of how you should read some Paydex scores, which are issued on a scale from 0 to 100:

• Paydex score of 100 – you can reasonably expect that you will receive full payment early
• Paydex score of 80 – payments from this business are typically in full and received at the appropriate time
• Paydex score of 70 – payment will likely be 15 days late
• Paydex score of 50 – 30 days late
• Paydex score of 20 – 120 days late

Contact Us

The freight factoring professionals of TBS Factoring Service, L.L.C. have factoring options for both your high-risk and low-risk clients. To learn more about how freight factoring can help to boost your bottom line, contact us at 1-800-207-7661.