If your business is trying to obtain financing, improve your relationship with your suppliers or earn a government contract, a DUNS number may be a missing ingredient for your success.
A DUNS number, issued by Dun & Bradstreet, is the standard international method for identifying businesses. It is frequently used in conjunction with business credit checks by suppliers and vendors, and it is internationally recognized, in contrast to an EIN, which is used for tax identification purposes within the U.S.
Suppliers and vendors (as well as lenders) use your DUNS number to evaluate your creditworthiness—and having one can help you obtain financing or favorable terms on trade credit payments.
A business DUNS number is also presently a prerequisite for obtaining government contracts, although the method of doing this is currently going through some important changes.
Here’s what you need to know about DUNS number coding, how it differs from your EIN, why you need one and how to get a DUNS number.
What Is a DUNS Number?
The Data Universal Numbering System (DUNS) is a method of using a unique numeric code to identify any business entity in the United States or other countries that use the DUNS system. The DUNS system was patented in 1962 and introduced in 1963 by Dun & Bradstreet, one of the oldest centralized credit reporting systems in the United States.
Since then, D&B has grown into a major international provider, and the DUNS system is now used throughout the world. Nations and international bodies that use the DUNS code include the United States, the European Commission, Australia and the United Nations. The global DUNS database currently includes over 300 million business entities.
The DUNS code uses 9 digits to uniquely identify a business entity. The digits are randomly generated, with no symbolic significance. At one time, the final digit of the DUNS code was used for error detection, which placed certain restrictions on which numerical combinations could be used, but this requirement has been eliminated to increase the number of codes available in the DUNS inventory. Removing this parameter made it possible to include another 800 million possible codes in the DUNS system.
The DUNS system is not the only international business identification system in use. For instance, the International Suppliers Network (ISN) system is also widely used. However, DUNS is the most popular international business identification code, with more business entities indexed than any other system.
Dun & Bradstreet keys a company’s DUNS code to the D&B business credit scoring system, known as PAYDEX. A PAYDEX score is used to evaluate a company’s credit trustworthiness by potential suppliers and vendors, as well as lenders. Being assigned a DUNS code is a prerequisite for being scored in the PAYDEX system.
How Does a DUNS Number Differ from an EIN Number?
The DUNS system is probably less familiar to most U.S. business owners than the business identification code used by the Internal Revenue Service on tax forms, the Employer Identification Number (EIN), also known as the Federal Employer Identification Number (FEIN), Tax Identification Number (TIN) or Federal Tax Identification Number (FTIN). Like a DUNS number, an EIN has 9 digits. However, there are important differences between these two codes, and they should not be confused:
- An EIN is issued by the IRS, while Dun & Bradstreet issues a DUNS number.
- An EIN is issued by the IRS to companies doing business in the United States, while a DUNS may be granted to companies in any country where DUNS is used.
- An EIN is used exclusively for tax administration purposes, while a DUNS is mainly used to help suppliers, vendors and lenders do credit checks.
- Government contractors for some U.S. agencies must have both an EIN and a DUNS number; and similarly, government contractors in countries such as Australia must have a DUNS number.
These distinctions mean that even if you already have an EIN, you may still find it advantageous or necessary to obtain a DUNS number.
Why You Need a Business DUNS Number
There are several reasons why you may find it helpful to obtain a DUNS number, or why you may be required to get one in certain circumstances:
- Because a DUNS number is indexed to D&B’s PAYDEX business credit scoring system, having one allows suppliers and vendors to use it to check your credit trustworthiness. This can influence their decision whether or not to do business with you.
- A good PAYDEX score may also give suppliers and vendors incentive to offer you more favorable trade credit terms. For instance, if you have a high PAYDEX score, a supplier may extend you credit by allowing you to pay for goods 30, 60 or 90 days after they are delivered instead of requiring payment on delivery.
- A strong PAYDEX score can also make banks, credit unions and other lenders more likely to extend you business loans and lines of credit, helping you maintain a healthy cash flow.
- By improving your creditworthiness in the eyes of suppliers, vendors and lenders, a DUNS number and PAYDEX score can help protect your personal credit from blows to your business credit, which can in turn help preserve your ability to obtain business credit on the strength of strong personal credit.
- If you’re seeking a government contract with a local, state or federal agency in the United States, or with an agency in another country, you may be required to have a DUNS number. The U.S. Office of Management and Budget currently requires a DUNS number for all applicants seeking new or renewal awards for government contracts. The General Services Administration is in the process of updating the DUNS system(3) and renaming it the System for Award Management Managed Identifier (SAMMI), with administrative duties to be transferred from Dun & Bradstreet to Ernst & Young. Exactly how this transition will be handled is an ongoing development, so if you’re a government contractor, communicate with the appropriate agency about your current requirements.
In short, if you use suppliers and vendors, if you’re seeking financing or if you’re a government contractor, you may want or need to obtain a DUNS number.
How Do You Get a DUNS Number?
The process for how to get a DUNS number is very simple. You can apply for a DUNS number through the official DUNS website.
In some cases, D&B will already have automatically assigned your business a DUNS number, so the first thing you may need to check is, “What is my DUNS number?”
To determine if you already have a DUNS number, you will be asked to enter your company’s legal name and location to search for your business entity. The prompts will show you how to find your DUNS number if you have one.
If you do not already have a number, you will be prompted to apply to get a DUNS number. To apply, your business must already be established as a legal entity with an EIN number (or another appropriate number) and contact information. An authorized representative of your company can apply.
If you’re a business entity based in the United States, you can request a DUNS number for free. The application process typically takes up to 30 days. You can request an expedited process within five days for an additional fee, though this fee may be waived for government contractors.
A DUNS number uniquely identifies your business in Dun & Bradstreet’s database so that suppliers, vendors, lenders and government agencies can easily check your creditworthiness with the D&B PAYDEX system. This can help you obtain favorable trade terms and financing, as well as win awards for government contracts.
Applying for a DUNS number is a simple process that you can start by visiting the official DUNS website.