Company Credit Score vs Payment Score
When you need to assess whether a UK company will pay your invoices on time, you have two main options: traditional company credit scores from agencies like Experian, Equifax, and Dun & Bradstreet, or payment scores based on actual invoice payment data. Understanding the difference could save your business from chasing unpaid invoices for months.
A company credit score is a numerical rating that estimates a business's creditworthiness and likelihood of defaulting on financial obligations. In the UK, scores are typically provided by credit reference agencies including Experian, Equifax, Creditsafe, and Dun & Bradstreet.
Most UK company credit scores use a 0-100 scale, though each agency calculates scores differently using proprietary algorithms. Experian classes 80-100 as "low risk", while scores below 40 indicate high risk. Dun & Bradstreet's PAYDEX score follows a similar range, with 80+ considered low risk.
Traditional credit scores combine multiple factors:
Financial indicators such as balance sheet strength, profitability, and debt levels from filed accounts at Companies House.
Legal and public records including County Court Judgments (CCJs), insolvency events, and company charges.
Credit utilisation covering how much of available credit a company uses across loans, overdrafts, and credit facilities.
Company demographics like age of the business, industry risk, and number of directors.
Payment data from lenders where available, though this typically covers bank loans and credit facilities rather than supplier invoices.
Company credit scores were designed primarily to help lenders assess loan applications. They answer the question: "Will this company repay borrowed money?" But for suppliers, the more relevant question is: "Will this company pay my invoices on time?"
Several limitations affect traditional credit scores:
Proprietary algorithms mean inconsistent scores. The same company can have wildly different scores from different agencies because each uses its own secret formula. A company rated "low risk" by one agency might be "moderate risk" at another.
Data is often outdated. Credit scores rely heavily on annual accounts filed at Companies House. For companies with year-end dates early in the year, the financial data used could be 18+ months old.
No visibility of supplier payment behaviour. Unless suppliers report payment data to credit agencies (most don't), a company's track record of paying invoices simply isn't captured.
Small companies are underserved. Businesses with limited credit history or abbreviated accounts provide little data for agencies to work with, resulting in less reliable scores.
A payment score specifically measures how well a company pays its suppliers. Rather than estimating creditworthiness through proxies like balance sheets and loan repayments, payment scores focus directly on invoice payment behaviour.
The PaymentCheck Score rates companies from 0 to 100 based on official UK government data that large companies must legally report twice yearly under the Payment Practices and Performance Reporting Regulations 2017.
The PaymentCheck Score uses four key metrics, each weighted according to importance:
Invoices paid within 30 days (40 points) measures the percentage of supplier invoices paid promptly. A company paying 80% of invoices within 30 days earns 32 points.
Average time to pay (30 points) rewards faster payers on a sliding scale. Companies averaging 15 days or fewer earn the full 30 points, while those taking 90+ days score zero.
Invoices not paid within agreed terms (20 points) penalises companies that breach their own payment terms. A company with 0% late payments earns 20 points; one with 100% late payments earns nothing.
Invoices paid after 60 days (10 points) further penalises very slow payment. Companies with no invoices taking longer than 60 days earn all 10 points.
Companies are grouped into performance bands:
| Score | Rating | What It Means |
|---|---|---|
| 80-100 | Excellent | Top-tier payers who consistently pay quickly |
| 60-79 | Good | Above-average payment performance |
| 40-59 | Fair | Average payment practices |
| 20-39 | Poor | Below average, room for improvement |
| 0-19 | Very Poor | Significant payment concerns |
| Factor | Company Credit Score | Payment Score |
|---|---|---|
| Primary purpose | Assess loan repayment risk | Assess supplier payment behaviour |
| Data source | Companies House filings, CCJs, lender reports | Government-mandated payment reporting |
| Update frequency | Varies; often based on annual accounts | Every six months (required by law) |
| Algorithm | Proprietary and opaque | Transparent and published |
| Coverage | All UK companies | Large companies (£36m+ turnover) |
| What it predicts | Likelihood of loan default | Likelihood of slow invoice payment |
| Best use case | Lending decisions | Supplier credit decisions |
The answer depends on what you need to know.
Use a company credit score when you're making lending decisions, assessing risk for large credit facilities, or need a broad view of financial stability including insolvency risk.
Use a payment score when you're extending trade credit to a supplier or customer, setting payment terms for a new account, or identifying companies likely to pay invoices slowly.
Use both together for a complete picture. A company might have an excellent credit score (strong balance sheet, no CCJs) but a poor payment score (routinely pays invoices late). Or vice versa: a company with a modest credit score might consistently pay suppliers within 20 days.
Late payment remains endemic in the UK. The Federation of Small Businesses estimates that 50,000 businesses close each year due to cash flow problems, many caused by late-paying customers. Yet traditional credit checks often miss the warning signs.
Consider a large retailer with billions in assets and a strong credit score. Traditional credit checks might rate them as "low risk". But if their average time to pay suppliers is 90 days and they regularly breach agreed terms, that "low risk" rating is meaningless to the small supplier waiting four months for payment.
Payment scores cut through this by focusing on what actually happens when invoices come due. They're based on mandatory government reporting, not voluntary submissions, and use a transparent methodology anyone can understand.
You can look up payment scores for UK companies required to report at PaymentCheck. Enter a company name or number to see their score, along with the underlying metrics and historical trends.
For companies below the reporting threshold (typically under £36m turnover), traditional credit checks remain your primary option. Consider combining credit reports with trade references from other suppliers who've worked with the company.
Company credit scores and payment scores serve different purposes. Credit scores estimate whether a company might default on financial obligations; payment scores measure whether they actually pay suppliers on time. For anyone extending trade credit or setting payment terms, a payment score provides more directly relevant information than a traditional credit check alone.
Before taking on a new customer or agreeing payment terms with a large company, check their payment score alongside their credit score. The combination gives you a clearer picture of what to expect when your invoices land on their accounts payable desk.
Check any large UK company's payment score free at PaymentCheck.co.uk
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