Cash management

How to calculate Days Beyond Terms (DBT)

April 16, 2021
How to calculate Days Beyond Terms (DBT)

Days Beyond Terms (DBT) is a measurement of how often a business pays its suppliers late.  

DBT is a fundamental component of a business’ credit score. Businesses with a high DBT average may find it harder to negotiate long credit terms and access finance.  

If your business has a customer with a high DBT average, you should consider putting them on short payment terms or even refusing them credit altogether to protect your business from late payments. You can find out your customer’s DBT average by running a credit check.

Days Beyond Terms formula  

To calculate your DBT average you will need:

1) The value of the invoices your business paid during the period you are measuring.

2) The due date of each invoice.

3) The date your business paid each invoice.

The formula for calculating DBT average is:

DBT = [SUM (invoice values x days in arrears)] / [SUM (invoice values)]

For invoices that are paid early, you can use a negative ‘days in arrears’ figure. For invoices that are paid on time, the days in arrears will be 0.  


A company wants to measure their average DBT for March. Their March invoices are listed in the table below. To work out their average DBT they:

1) Sum the invoice values for the month. In this instance the total value is £10,300.

2) Multiply each invoice value by the number of days the invoice was in arrears and sum the resulting values. In this example, the resulting number is 41,000.  

3)  Divide this number by the total invoice values: 41,000/10,300.

Their average DBT for March is 3.98.

Days Beyond Terms (DBT) example

Why are Days Beyond Terms important?

You should keep your DBT average low in order to maintain a healthy credit score. Additionally, keeping an eye on your customers’ DBT average will help protect your business from late payments.  

You can use Satago’s credit checking software to view your customers’ average DBT and their credit score. So, you can make an informed decision about whether to offer them credit.  

Average Days Beyond Terms by industry

DBT varies by industry. To find out how your business stacks up, you should measure your DBT against the average in your sector. Similarly, you can measure your customers’ DBT against the average in their sector.  

Remember, DBT indicates how often invoices are paid late. So, a company that is put on short payment terms could have a higher DBT average than a company that is put on longer payment terms, even if they pay their invoices faster.  

Here is the average DBT by industry for 2020.  

DBT by industry 2020

Scenarios where DBT average is useful

1) Applying for finance: It’s useful to know your DBT average before you apply for finance, as it may affect the interest rate you are offered.  

2) Improving your processes: If your business often pays its suppliers late, think about why. Do you struggle with cashflow? If so, what can you do to improve?

3) Deciding a customer’s credit terms: If your new customer often pays suppliers late, you should think twice about putting them on generous credit terms. Checking their DBT average is a good way to determine their payment practices.  

4) Applying for invoice finance: If you’ve decided to free up cash from your unpaid invoices using invoice finance, you should check your customers’ credit score and DBT to ensure there’s no risk of late payment.

To learn more about Satago’s cash management software, sign up to the platform or book a demo with our team.