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.

I’m tired of all the bad news.  Seriously.  Every day it seems like it’s something different.  We get a brief ray of sunshine, and we feel good for a few minutes, then its right back to feeling bad again.  Like today… for those of us who are in the Northeast (New Jersey specifically), the constant rain that is causing all kinds of severe problems.

Do you recall the good old days?  Seemed like everyone was employed, everyone was making money, the market was going gangbusters.  Remember?  They tell us we won’t see that again for quite some time.  I think it’s been labeled “the new normal”…or something like that.

Anyway, back to looking for bright spots.  I think I may have found one that provides a little glimmer of hope.  It’s that overall risk score performance of U.S. businesses is getting better!  That is, at least when you compare average risk in Q1 2011 with Q2 2011.

 Our latest quarterly business benchmark report shows that the average risk score was 57.4.  That represents a 5.1% improvement over Q1!  For Q1, the average risk score was 54.6.  Granted, the Q2 average score is down 1.4% over Q2 2010, but it looks like we are “headed higher.”  Progress!

So, on a day when it’s raining (as it has almost non-stop for the last 3 ½ days), I’m going with this as my “silver lining,” and look forward to seeing more.

Summer vacations are in full swing and I can’t wait to spend some time at the beach with the family this summer. Since late payments and bad accounts never seem to take a vacation, I want to remind you of a couple of the tools we have available to help you manage your accounts.

1.      Register your accounts to be monitored and choose to be notified as events happen – everything from score changes, late payment warnings and public record updates.

2.      Run your accounts through a credit policy in batch format. This will provide consistent account review and give you the ability to act only upon those accounts with a decision or credit limit change.

3.      Last, but not least is regular account review though portfolio scoring.

Learn more about our account management tools – and hopefully regular account reviews can give you a vacation from bad accounts.

Most of us are pretty familiar with credit reports and scores, but how many of you are aware of the additional tools available to help you manage the entire credit risk lifecycle? I talk to credit managers everyday and as we’re all trying to do more with less, it’s easy to forget that opening accounts is just the first step. Managing risk on these accounts is as critical, if not more so, than opening them.

While others may choose to “ship and chase”, you don’t need to. Proactive alert/monitoring services, regular portfolio scoring and segmentation are key components that a successful credit department needs to employ in the constant battle against “bad” accounts. Use these tools to proactively adjust credit terms and limits, both positively and negatively. Inevitably some accounts will go bad, but using collection research tools for skip tracing and targeting services for debt collection will put you first in line for collections. A journey of 1000 miles begins with a single step; we have tools that can help you with that journey and all can be accessed online.