The Misunderstood Metric: A Closer Look at an Underrated Business Indicator

When finance leaders evaluate risk, metrics like revenue growth, debt-to-equity ratios and cash reserves often dominate the conversation. But there's another figure that deserves far more attention than it receives: Days Beyond Terms, or DBT.

At its core, DBT reflects how many days beyond agreed-upon payment terms a company takes to pay its invoices. It’s a straightforward number, but a remarkably telling one. A persistently high DBT or sudden spikes over time can reveal financial stress, could signal a looming liquidity crisis, or flag internal breakdowns in accounts payable operations. 

For instance, if a company has a DBT of 18 in February, then jumps to 32 in March and then climbs to 58 in May, that significant and consistent increase in payment delays could signal cash flow issues. Dig deeper and you might uncover that a significant portion of unpaid invoices are no longer just slightly overdue, but are aging into critical territory, moving from 31–60 days late to 91+ days past due. And yet, despite its diagnostic power, DBT is often misunderstood and overlooked in the larger finance community. I’d argue that DBT remains one of the most underused financial indicators in businesses today.

Why late payment trends require closer scrutiny

Research released in March 2025 showed that late payments are a widespread problem. In fact, 31% of the respondents said they’ve seen late payments increase in the last 12 months. The scale of the issue is striking: 86% of businesses said up to 30% of their monthly invoiced sales are overdue and 66% reported waiting on as much as $70,000 in late payments each month. That level of disruption isn’t just inconvenient; it can stall operations, delay growth plans and strain supplier relationships. 

It’s easy to view these as isolated incidents or attribute them to external conditions. But in many cases, they are symptoms of a larger issue: declining financial health. DBT provides a window into that health before more severe warning signs appear.

Blind spots

So why is DBT so often overlooked? Part of the problem is how it’s presented. A single DBT value can hide significant risks if not viewed in a historical context. A company might have a DBT of 14 (i.e. paying suppliers 14 days late), which seems acceptable at first until you realize that the company’s DBT has been climbing both significantly and steadily over the last 12 months. So, suppliers are being paid 60 or even 90 days late. 

Context is everything. DBT should be tracked over time, compared across peer companies and evaluated alongside other indicators such as revenue volatility, trade payment breakdowns and legal filings. A rising DBT, paired with a spike in the number of payments that are 91+ day past-due, warrants a deeper investigation.

Another challenge is that many businesses are still unfamiliar with how to access and interpret this data. While consumer credit scores are widely understood, business credit reports, where DBT typically appears, are less familiar. But not all credit reports are created equal. The most useful ones include a blend of real-time trade payment data, legal filings, credit usage trends and financial health indicators like DBT. Reports that rely solely on static financial filings or outdated information miss critical changes in payment behaviors. 

To gain a true picture of a company’s financial reliability, finance teams should seek out credit risk data providers that offer granular and regularly updated DBT insights. Used correctly, business credit reports are both risk checkers and strategic tools that can reveal stress fractures in a company’s financial foundation long before they become breaking points.

DBT as an early warning sign 

What makes DBT so powerful is how quickly it responds to financial stress. Unlike lagging indicators such as earnings reports or tax filings, DBT can shift in near real time, offering one of the earliest signals that a company may be delaying payments to manage cash flow. For suppliers, that’s critical information as it creates an opportunity to renegotiate terms, request prepayment, or reconsider a business relationship before payment issues escalate.

For buyers, a high DBT isn’t always a sign of distress. It might point to operational inefficiencies like delays in invoice approvals, limited accounts payable staffing, or poor communication across departments. These issues are solvable, but only if organizations are tracking the right signals.

DBT is especially valuable in industries where cash flow pressures are common and margins are tight, such as logistics, construction and retail. In these sectors, late payments can ripple through the supply chain, putting pressure on smaller vendors and disrupting projects. Monitoring DBT trends allows companies to act early, whether by adjusting payment terms, diversifying their supplier base, or increasing due diligence. With better visibility into payment behaviors, businesses can shift from reacting to problems to actively managing financial risk.

From reactive to proactive

Reactive risk management is no longer good enough. DBT offers a chance to be proactive. By embedding it into financial analysis, procurement decisions and customer onboarding processes, businesses can avoid surprises and build more resilient partnerships. The solution isn’t just to monitor DBT— it’s to understand it. That means asking:

• How is the DBT of our customers and suppliers trending over the course of 12 months?

• Have there been sudden and drastic spikes in DBT in certain months?

• Has the DBT risen both significantly and consistently for over 6 months?  

• What do the DBT trends look like across our entire customer portfolio? 

• What internal factors are affecting our customers’ ability to pay on time?

Answering these questions won’t just improve business relationships, it will uncover operational inefficiencies, mitigate risk and strengthen the overall financial health of your organization.