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.

You’ve got a great idea, the capital and the know-how to make it happen. Yet entrepreneurial success also depends on something else many small business owners don’t pay enough attention to: your business credit profile.

Here’s a tip! Just as your personal credit rating has a big impact on your financial health, your business credit rating can help you get competitive business loan rates and terms. Having complete, up-to-date information on your business credit profile can help improve your credit rating…and maintaining a good credit rating is the best way to obtain favorable financial terms.

To obtain a recent copy of your business credit profile online, and to make sure it’s updated with accurate information on your business, visit BusinessCreditFacts.com. Click on the orange button that reads “Update my report”.

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.