Know If a Company Is Likely to Go Out of Business with the Dun and Bradstreet Business Credit Report

Ann Marie Smith

May 24, 2021

Overall, more than 32,000 commercial bankruptcy filings were made last year. While that number decreased from 2019, it included more than 7,000 businesses filed for Chapter 11 bankruptcy — a 29% increase. 

Experts say the worst may yet to come, pointing to the 2007 financial crisis in which bankruptcies did not peak until three years later.

If one of the companies you do business with goes out of business or files for bankruptcy protection, it impacts your business. By pulling a business credit report, you can mitigate your risk by evaluating the financial health of a customer, client, or supplier.

The best business credit report will provide you with the information you need to make better decisions about offering credit and under what terms. By analyzing past and current performance, payment history, and comparing a business to other similar companies, a business credit report will help you assess the financial health of a business and predict its viability.

The Dun and Bradstreet Business Credit Report

The Dun and Bradstreet (D&B) business credit report provides several measures for you to evaluate your risk, including:

  • Viability score
  • Portfolio comparison
  • Total loss predictor

These measures can predict the likelihood of companies being delinquent on their bills or going out of business. D&B also offers a proprietary Paydex score to help you plan cash flow by anticipating how promptly bills are likely to be paid.

Viability Score

The viability score assesses the likelihood that a company will no longer be in business with the next 12 months compared to other businesses. This includes:

  • Voluntary or involuntary business closures
  • Dormant or inactive
  • Filing for bankruptcy

A viability score is based on a scale of 1 to 9, with 1 being the best.

Portfolio Comparison

The portfolio comparison also uses a scale of 1 to 9, with 1 being the best. It assesses the viability of a business by comparing performance to similar businesses within the same segment, as classified by:

  • Available financial data
  • Established trade payments
  • Limited trade payments
  • Firmographics and business activity

Total Loss Predictor

The Dun and Bradstreet Total Loss Predictor predicts the possibility that you will never get paid for your goods or services. D&B defines this as an account where the balance owed rolls into 120+ days past due.

The delinquency predictor risk class ranges from 1 to 10. Ten is considered the highest risk, indicating businesses that may have already closed, show significant financial deterioration in the past years, or have open bankruptcy proceedings.

The Paydex Score

The Dun and Bradstreet business credit report also features the Paydex Score, which helps you predict the likelihood of getting paid on time. The Dun and Bradstreet model evaluates past payment performance to produce a numerical score from 1 to 100, with 100 representing a perfect score. Scores at 70 or below indicate a company typically pays its bills 15 days beyond term. A score between 1 and 19 indicates payments more than 120 days beyond term.

D&B analyzes tradelines for a company’s suppliers and vendors and compares terms with payments. The Paydex score is weighted by dollars, so large dollar payments will be valued more heavily.

Which is the best business credit report for your business? Download our Executive Report: Select the Best Business Credit Report to learn more.

How the Dun and Bradstreet Business Credit Report Risk Assessment Helps You Evaluate Risk

A Dun and Bradstreet business credit report can help you determine the risk that a client, customer, or supplier will go out of business in the next year. The information you get from a D&B report helps you reduce your exposure to bad debt or slow payments that can hurt your cash flow.

Before you extend credit to customers or enter into agreements with suppliers, you need to know whether they are financially stable enough to live up to their obligations. The information contained in the Dun and Bradstreet business credit report can help you decide whether to extend credit and under what terms.

How to Buy a Dun and Bradstreet Business Credit Report

You can buy a Dun and Bradstreet business credit report on-demand using accredit. Sign up for a free account, select the D&B business credit report, enter the business name, and then download the report instantly. There is no waiting and you do not need to sign up for subscriptions with accredit.

View a sample D&B business credit report or buy instantly here.