A DUNS number is issued by Dun and Bradstreet and represents the way in which businesses come to be identified. So when you go to get a credit check and apply for loans, for instance, this number may be utilized to assess your application. Unlike an EIN (used for tax purposes/) the DUNS number is about checking how creditworthy you are. If you do foresee trying to get financing or credit from suppliers in the near future, you definitely want to consider getting a DUNS number. Below are some crucial details when it comes to obtaining your DUNS number as well as why you might want to go ahead and get one for your company.
DUNS stands for Data Universal Numbering System. It is a numeric code identifying businesses internationally. Introduced by Dun & Bradstreet in the 1960s, it is one of the oldest credit reporting methods utilized in the US today as far as businesses are concerned. Since its inception, the DUNS reporting system has gone global. To date, there are over 300 million businesses in the database.
Your DUNS code will consist of 9 numbers. These are all randomly generated. There are millions upon millions of possible codes available and so basically any business that wants one can apply. What happens with your DUNS code, is that Dun & Bradstreet will sync your code with a credit scoring system. This score is known as a PAYDEX score used by lenders, vendors, and other such suppliers to better evaluate how creditworthy a company is. You have to have a DUNS code to appear in the PAYDEX system.
How is This Different From My EIN Number?
While not every business has a DUNS number, almost all companies have an EIN or employer identification number. This is also known as the Federal Employer Identification Number (FEIN/), Tax Identification Number (TIN/) or Federal Tax Identification Number (FTIN/). It too consists of 9 numbers. But there are very distinct differences between the two and what they are used for.
- An EIN is given to you via the IRS.
- An EIN is for companies operating in the US, while a DUNS can be worldwide.
- EINs are for tax purposes only, the DUNS number is to check your creditworthiness.
- Government contracts may require both numbers.
So while you don't necessarily have to have a DUNS number—it may be worth it to look into getting one.
The Benefits of Having a DUNS Number
Beyond just the benefits of getting this number, there may be situations in which you're actually required to have one. Consider the following:
As it is associated with the PAYDEX system, the DUNS number gives lenders and suppliers easier access to your credit trustworthiness; facilitating their decision may mean a better chance of getting approved.
With a decent PAYDEX score, you might be able to negotiate better terms with your creditors. For example, they could extend you longer repayment terms and. Or lower interest rates.
You will have a better chance of qualifying for business loans with a good PAYDEX score. Let's say you need a short term loan to boost cash flow—everything you can do to enhance your application counts.
The DUNS number will help you further separate personal and business credit. This can protect both as they are less likely to impact one another; not to mention, you get to build up your business creditworthiness distinct from the personal.
A number of government contracts will require a DUNS number. Especially if you're seeking to work with an agency abroad, you may definitely need this.
Basically, if you do have relationships with a number of suppliers and vendors or are looking for future funding or intend to work on any government contracts, then a DUNS number is probably something you're going to want to be sure and get.
Getting a DUNS Number
Really, getting your DUNS number requires going to the DUNS website and following the steps noted there. In certain instances, a business may already have a DUNS number assigned them. You definitely want to start by checking to see if this is the case.
By entering your company name and address you will be able to search and consequently see if there is a DUNS number on file for you already. Follow the steps to retrieve said number if applicable.
If you discover that you do not already have a number, the site will lead you through the requirements for obtaining one. In order to apply for a number, you have to be a legal entity and already possess an EIN number.
The application process is free as long as you're a US based business. Upon submitting all requisite info, it may take up to 30 days to process and then get you your DUNS number. The issuing of your DUNS number can be expedited, however, there is an additional fee for this service.
So should you get a DUNS number through Dun & Bradstreet? Again, as mentioned if you do deal a lot with vendors and suppliers this may be a good idea. And if you're working on government contracts, you may have no choice but to get one. All in all, it is a relatively simple process that could lead your business to build up creditworthiness and thus help you get approved for more favorable terms in the long run.