Why operators need to pay attention to their Paynet credit ratings

In recent weeks, some operators may have discovered their commercial credit rating has taken a hit despite working with their creditors.

With so many operators making payment modifications during the pandemic as revenues shrank, there have been cases where these arrangements haven’t been properly applied or accounted for in payment records. As a result, some reports are showing delinquencies.

Fortunately, the problem can be fixed if it is due to inaccurate information, said Dave Johnson, MCI’s Financial Services Regional Sales Manager. He joined a recent UMA Town Hall to explain what to do.

PayNet records

“All the banks and lenders utilize PayNet. It’s a very important part of the credit process. Basically, PayNet is like a corporate credit bureau,” said Johnson, adding that operators should make sure their PayNet records are accurate so future financing is as easy as possible.

PayNet is used by secured lenders who do equipment financing.

Because these records are available only to PayNet members, UMA Members may not become aware of the issue until they are applying for a new loan, according to Johnson.

Reach out to lenders

Operators can’t contact PayNet directly. They will need to reach out to their lenders, which are PayNet members, to correct any inaccuracies on the reports, he said.

If everything goes smoothly, the process usually takes about 30-45 days.

“I don’t believe lenders can share the report with anyone who isn’t a member, so you have to rely on your lender to say, ‘Hey, you are showing delinquent.’ And then an operator would have to say, ‘Hey that’s not correct,’ and work with that lender to reach out to PayNet to get that corrected,” Johnson explained.

He added that he didn’t think the issue was widespread, but operators should check with their lenders because it may be more common in light of the payment modifications added during the past year.

10 years of records

David Scoular, Director of Finance at Prevost, and Matt Hotchkiss, Bus Division Sales Manager for Wells Fargo Equipment Finance, joined the conversation to answer UMA Member questions during the Town Hall presentation.

When asked how long lenders might look back at PayNet records, Hotchkiss said he believed lenders might look back 10 years on PayNet records and would ask about any significant pay issues during that time period.

“It is an important tool for an equipment lender, so they put a lot of weight on a PayNet score,” Hotchkiss said.

Watch the recording to see the full presentation.


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