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 Calculation of Days Beyond Terms

 

A days beyond terms (DBT) figure is calculated:

  • For a month

    This DBT figure is used for the drill-down by period.

  • For the last 12 months, including the current month

    This DBT figure is used on the KPI tile and in the drill-down by customer.

The formula for calculating a DBT figure is: DBT = [sum (payment amounts x days in arrears)] / [sum (payment amounts)].

Payment amounts must be cleared.

Note Note

Days in arrears can be within terms (early) or beyond terms (late). If a payment is within terms, days in arrears is a negative number. For more information, see Calculation of Days in Arrears.

End of the note.

The examples below show how a DBT figure is calculated for a payment that is made within terms and a payment that is made beyond terms.

Example

Example 1: Payment is made beyond terms:

  • 1000 should have been paid by April 30

  • 1000 is paid on May 2

  • Days in arrears = 2

DBT = [sum (payment amounts x days in arrears)] / [sum (payment amounts)]

DBT = (1000 x 2) / 1000 = 2

Example

Example 2: Payment is made within terms:

  • 1000 should have been paid by April 30

  • 1000 is paid on April 25

  • Days in arrears = -5

DBT = [sum (payment amounts x days in arrears)] / [sum (payment amounts)]

DBT = (1000 x -5) / 1000 = - 5

Calculating DBT for All Payments Within and Beyond Terms

To calculate the DBT for all payments that are made within and beyond terms within one month:

  1. The payment amounts are multiplied by the respective days in arrears and added up.

  2. The payment amounts are added up.

  3. The result from Step 1 is divided by the result from Step 2.

Example Example

Two invoices are paid as follows:

  • Invoice 1: 1000 paid 2 days late

  • Invoice 2: 50 paid 5 days early

Calculation [sum (payment amounts x days in arrears)]:

2 x 1000 = 2000

-5 x 50 = -250

2000 - 250 = 1750

Calculation [sum (payment amounts)]:

1000 + 50 = 1050

Calculation sum (payment amounts x days in arrears) ]/ [sum (payment amounts)]:

DBT = 1750 / 1050 = 1.666

End of the example.

More Information

For information on the Days Beyond Terms app, see Days Beyond Terms.