In my last post I shared some insight on Experian’s Days Beyond Terms (DBT). Today, I’ll answer a question I received following that post - Why is there more than one DBT on a business credit report? The answer is different trade payment types may result in a different DBT. Let me explain what I mean to help pull it all together.
As you may recall, DBT is calculated from trade payment information received from suppliers. We then classify this information into three different categories – new, continuous and additional.
- Continuous – trade payment information with at least one (1) update in the three (3) months
- New – trade payment information added within the last three (3) months with no previous updates
- Additional – trade payment information not updated within the last 3 months or non-trade accounts (ex: leasing and loans)
New and continuous tradelines provide a timely perspective on how a business is handling its current payment obligations. In addition, the distinction in tradeline type provides visibility into whether an applicant may be paying new vendors better or worse than the old vendors. Additional Payment experiences provide insight into past payment performance and recent experiences with nontrade accounts.
Experian calculates DBT for trade payment information classified as continuous and new. We also calculate a “combined DBT” which reflects the DBT of both continuous and new trade payment experiences. The DBT is available for the current month and historically through monthly and quarterly DBT trends to help identify timeliness of payment experiences over time.
I know that’s a lot of information, but I hope it it helped explain why a business may have more than one DBT. To see this information come to life a real business, check out the BusinessIQ Premier Profile.