Published By Janet Gershen-Siegel at July 12th, 2018
There are 10 uses for a DUNS number – at least!
Does your business have its free DUNS number from D&B? It’s easy to get – just don’t let them upsell you.
But have you been wondering exactly what the number is used for? Here are 10 uses for a DUNS number.
If you have ever had a job in the data field, then you know the term well. A DUNS number is a primary key. The idea is to have a unique identifier for everything on a big list. That is because a database is just a big interactive list. Consider your telephone directory.
There may be more than one Mary Smith in your town. How can you tell them apart? Without having to look up which one lives on Maple Street and which one is on Elm Street, that is.
Using a primary key means a lookup is unnecessary. This makes working with data a lot quicker. It’s one of the internal uses for a DUNS number.
In Dun & Bradstreet’s system, the DUNS number serves as a primary key. But their IT department may even use a different number. It helps D&B tell the difference between Joe’s Pizzeria in Plymouth and Joe’s Pizzeria in Milwaukee.
Deciding if a business can be a sound business partner is a major decision and requires extreme vetting. Potential business partners will use a DUNS Number. This is so they can determine a company’s credit history and viability in its report.
If a business does not have a DUNS Number then there is no resume. There’s also no financial report card for the business. This makes it hard to perform due diligence on a company. Entities that need to do so include potential business partners, investors, and customers.
For a business, having the government as a customer is a tremendous opportunity.
However, you may need it in order to bid on contracts or receive grants. This is because many local, state and federal governments require a business to have a DUNS Number.
A DUNS number is a directly link to a company’s business credit report with Dun & Bradstreet. When a company gets a DUNS Number, it can establish its own business credit file. It can then start to build its business credit score.
A company will still have to have payment experiences reporting. But with a solid business credit file, businesses can assess the creditworthiness and financial stability of a business.
This includes lenders, leasing agents, suppliers, current or potential customers, potential business partners, or other companies.
A DUNS Number can even be a part of the verification of a company’s credentials and existence. This is during the SSL application process. So getting an SSL Certificate approval for the company may be faster and need less documentation.
Apple requires a DUNS Number to create a Company iOS developer account. The DUNS Number is useful for checking the identity and legal entity status of the business. This is a part of the enrollment verification process for joining the Apple Developer Program.
You’ll also need a DUNS for the Apple Developer Enterprise Program.
If a company wants to become a supplier for a major retailer, then a DUNS Number is mandatory. It is a requirement for supplier registration with companies and banks such as Bank of America, PNC, and Wal-Mart.
And it’s a requirement for Kroger, Target, and Kohls®. You’ll also need one for Intel®, Aetna®, Porsche®, BMW, and more.
Business customers, vendors, and suppliers also use a DUNS number to review a company’s business credit file. This may be to check financial stability, or determine if a company can fulfill a contract. It can also be to decide how much credit to extend.
Or it can help companies determine how dependable any given business is as a supplier.
See it from their perspective. All customers, suppliers, lenders and other business partners want to protect and manage their own risk. They accomplish this by reviewing a company’s D&B report. This helps them decide whether to start or continue to do business with a company.
The DUNS Number is a recognized universal standard for business identification. It identifies, validates and links to over 265 million businesses worldwide. It is even recognized and recommended by more than 200 government, trade, and industry organizations.
When a business gets a DUNS Number, it means the company has gone through thorough vetting. The company has by definition passed D&B’s strict validation process.
So a DUNS Number is a requirement from lenders and banks on business loan applications. They use the DUNS to get a copy of a company’s credit file.
A DUNS is also required when applying for an SBA loan. Per SBA “If you are already in business, you should be prepared to submit a credit report for your business.”
The Small Business Administration requires all SBA loans be reported to the business CRAs during the life of the loan.
Of course you need a DUNS number to build credit for your business. After all, when you look back at #1, the idea of a system identification should loom very large. Dun & Bradstreet is not going to add any records about business credit building with a unique ID.
Why? Because D&B deals with millions of business records every single day. Having a unique identifier keeps them organized. And you want that, so you don’t accidentally get the blame for some other company’s poor use of credit.
Let’s look at how you build business credit with a DUNS number.
Establishing corporate credit is a process, and it does not occur automatically. A company will need to proactively work to establish corporate credit. However, it can be done easily and quickly, and it is much more rapid than developing personal credit scores. Merchants are a big aspect of this process.
Doing the steps out of order will result in repetitive denials. No one can start at the top with business credit. For instance, you can’t start with store or cash credit from your bank. If you do you’ll get a rejection 100% of the time.
A business must be authentic to loan providers and vendors. Consequently, a business will need a professional-looking web site and e-mail address, with site hosting bought from a supplier such as GoDaddy. Additionally business telephone and fax numbers must have a listing on 411.com.
Also the business telephone number should be toll-free (800 exchange or the like).
A small business will also need a bank account dedicated only to it, and it must have every one of the licenses essential for operating. These licenses all have to be in the identical, accurate name of the corporation, with the same small business address and telephone numbers. Note that this means not just state licenses, but possibly also city licenses.
Visit the Internal Revenue Service web site and acquire an EIN for the company — they’re free. Pick a business entity like corporation, LLC, etc. A business can begin as a sole proprietor but will probably wish to change to a type of corporation or partnership to reduce risk and take full advantage of tax benefits.
A business entity will matter when it involves taxes and liability in the event of a litigation. A sole proprietorship means the owner is it when it comes to liability and tax obligations. No one else is responsible.
If you operate a small business as a sole proprietor at least file for a DBA (‘doing business as’) status. If you do not, then your personal name is the same as the corporate name. Consequently, you can wind up being directly liable for all small business debts.
Also, per the IRS, with this structure there is a 1 in 7 possibility of an IRS audit. There is a 1 in 50 possibility for corporations! Prevent confusion and significantly lower the odds of an IRS audit simultaneously.
Here’s where the uses for a DUNS number come into play.
Once in D&B’s system, search Equifax and Experian’s web sites for the business. You can do this at https://www.creditsuite.com/reports/. If there is a record with them, check it for correctness and completeness. If there are no records with them, go to the next step in the process. By doing this, Experian and Equifax will have something to report on.
First you must establish trade lines that report. This is also known as vendor accounts. Then you’ll have an established credit profile, and you’ll get a business credit score.
And with an established business credit profile and score you can begin getting revolving store and cash credit.
These sorts of accounts often tend to be for the things bought all the time, like coffee, shipping boxes, outdoor work wear, ink and toner, and office furniture.
But first off, what is trade credit? These trade lines are creditors who will give you starter credit when you have none now. Terms are usually Net 30, rather than revolving.
So if you get an approval for $1,000 in vendor credit and use all of it, you need to pay that money back in a set term, such as within 30 days on a Net 30 account.
Net 30 accounts need to be paid in full within 30 days. 60 accounts have to be paid fully within 60 days. Compared to with revolving accounts, you have a set time when you must pay back what you borrowed or the credit you used.
To launch your business credit profile the right way, you need to get approval for vendor accounts that report to the business credit reporting agencies. When that’s done, you can then make use of the credit.
Then pay back what you used, and the account is on report to Dun & Bradstreet, Experian, or Equifax.
Not every vendor can help like true starter credit can. These are vendors that will grant an approval with nominal effort. You also want them to be reporting to one or more of the big three CRAs: Dun & Bradstreet, Equifax, and Experian.
But you may have to apply more than once to these vendors, and you may need to buy some items you don’t need, to demonstrate you are responsible and will pay punctually. Consider giving nonessential items to charity.
Once there are 5 to 8 or more vendor trade accounts reporting to at least one of the CRAs, progress to revolving store credit. These are companies such as Office Depot and Staples. These companies are likelier to have supplies you need.
Use the small business’s EIN on these credit applications.
One good example is Lowe’s. They report to D&B, Equifax and Business Experian. They want to see a DUNS and a PAYDEX score of 78 or better.
Are there 8 to 10 accounts reporting? Then move to fleet credit. These are companies like BP and Conoco. Use this credit to buy, fix, and maintain vehicles. Make certain to apply using the corporation’s EIN.
One such example is Shell. They report to D&B and Business Experian. They need to see a PAYDEX Score of 78 or better and a 411 small business phone listing. Shell may say they want a specific amount of time in business or profits. But if you already have enough vendor accounts, that won’t be necessary and you can still get approval.
Have you been sensibly managing the credit you’ve gotten up to this point? Then move to cash credit. These are companies such as Visa and MasterCard. Keep your SSN off these applications; use your EIN instead.
One such example is the Fuelman MasterCard. They report to D&B and Equifax Business. They need to see a PAYDEX Score of 78 or more; 10 trade lines reporting on your D&B report; and a $10,000 high credit limit reporting on D&B report (other account reporting). Also they want you to have an established business.
These are service providers like Walmart and Dell, and also Home Depot, BP, and Racetrac. These are typically MasterCard credit cards. If you have 14 trade accounts reporting, then these are attainable.
Know what is happening with your credit. Make sure it is being reported and fix any errors as soon as possible. Get in the practice of taking a look at credit reports and digging into the particulars, and not just the scores.
We can help you monitor business credit at Experian and D&B for only $24/month. See: https://www.creditsuite.com/business-credit-monitoring.
So, what’s all this monitoring for? It’s to challenge any problems in your records. Errors in your credit report(s) can be fixed. But the CRAs typically want you to dispute in a particular way.
Disputing credit report inaccuracies usually means you mail a paper letter with copies of any evidence of payment with it. These are documents like receipts and cancelled checks. Never mail the originals. Always send copies and retain the original copies.
Disputing credit report inaccuracies also means you precisely spell out any charges you dispute. Make your dispute letter as clear as possible. Be specific about the issues with your report. Use certified mail so that you will have proof that you sent in your dispute.
Always use credit sensibly! Don’t borrow beyond what you can pay back. Keep an eye on balances and deadlines for repayments. Paying on schedule and completely will do more to elevate business credit scores than almost anything else.
Building company credit pays off. Good business credit scores help a corporation get loans. Your lender knows the business can pay its debts. They recognize the corporation is authentic. The company’s EIN connects to high scores, and creditors won’t feel the need to demand a personal guarantee.
Business credit is an asset which can help your company in years to come.
There are more than 10 uses for a DUNS number because it isn’t just a necessity for business credit building. It’s a good idea for all companies. Because any company benefits by as many entities as possible seeing it as being legitimate.