Building Business Credit with D&B?

March 05, 2019

by a searcher from University of Pennsylvania - The Wharton School in Chicago, IL, USA

Posting this because I think the answer might be useful to more people than myself. My CFO and I are trying to decide if spending the money to build business credit for our companies through Dun & Bradstreet is worth it. Basically, D&B would charge $2k/yr per entity and all financial transactions would be reported to the agency (debt payments, payroll, transactions with our suppliers). Our companies are manufacturers and purchasing raw materials on credit is important for our "order to cash" timing, etc.. $2k/yr is money well spent if D&B ratings are considered important and a lot of businesses use that data. D&B is a monopolist and probably not a benevolent one - so I would love to hear others' opinions on this! Related questions: Did having solid data on D&B help you get lower interest rates on debt financing or did it help you get better terms? Did it make is easier to work with suppliers? etc.?

Reply by a searcher
from University of Pennsylvania in Chicago, IL, USA

Thanks, Darrin. That is the general consensus that I am hearing. We are trying to get away from vendors that want a personal guaranty to register. One supplier had a credit application that named one's spouse as a guarantor as well! My thought was that if we had a very solid D&B file, we could just tell these suppliers to look at our D&B rating and that should be good enough. $2k/yr is a lot if the rating is meaningless - however, I am not convinced yet that my idea is wrong - although I haven't found someone that agrees with me yet (other than the D&B sales team)!! For what it is worth, we are passing on it for the time being.

Reply by a searcher
from Carnegie Mellon University in Chagrin Falls, OH, United States

It depends on your industry. I'd try polling your vendors to understand how they make credit decisions. When I was a credit manager at an industrial supply business, we used D&B ratings quite a bit, but our decisions were also heavily influenced by the individual payment history of each client.

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