Use DBT to Understand Your Delinquent Customers - Funding Gates Blog
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Use DBT to Understand Your Delinquent Customers

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You know that every company has some delinquent customers. But do you ever wonder just how bad your past due AR is? This is where Days Beyond Terms (DBT) can help.

DBT gives you a snapshot of how delinquent your past due invoices are. Tracking the severity of these outstanding invoices will help you monitor your progress as you reduce the amount of delinquent AR. 

What is DBT?

Days Beyond Terms is the average number of days that your delinquent invoices have been overdue. This key AR metric gives you insight into the behavior of your worst customers. However, because it only measures overdue invoices, it’s important to look at DBT in conjunction with other AR metrics, like Days Sales Outstanding (DSO) and your Collections Effectiveness Index (CEI). 

DBT Calculation:

Days Beyond Terms is calculated daily in your Funding Gates Reports. Keep tabs on your past due customer by checking it regularly in the AR Analytics Dashboard.

How to improve DBT?

  • Send invoice reminders before an invoice is due to prevent an invoice from becoming delinquent.
  • Use collections when necessary. If customers don’t respond to you, escalate these for more aggressive collection efforts.
  • Write off uncollectible debt that is over 120 days past due. Having these invoices linger on your aging report will affect your average Days Beyond Terms.

 

 

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