Days Past Due Defined
Days Past Due (DPD) is the number of calendar days that have elapsed since an invoice's payment due date. It is calculated as the report date minus the due date. If the result is zero or negative, the invoice is considered current (not yet due). If the result is positive, the invoice is past due by that number of days. DPD is the foundational metric in AR securitization because it determines which aging bucket each receivable falls into, which in turn drives eligibility, advance rates, and cross-aging calculations. A receivable at 0 DPD is current, while one at 95 DPD is severely delinquent.
Aging Bucket Classification
DPD is used to classify receivables into standard aging buckets: Current (0 DPD or not yet due), 1-30 DPD, 31-60 DPD, 61-90 DPD, and 91+ DPD. Each bucket typically receives a different advance rate, with current receivables commanding the highest rate (85-90%) and older buckets receiving progressively lower rates or being excluded entirely. The 91+ bucket is almost universally ineligible. The aging bucket distribution is reported in the Borrowing Base Certificate and is one of the primary metrics lenders use to assess portfolio health. A portfolio with a high percentage of current receivables is considered healthy, while increasing concentration in older buckets signals deterioration.
Deriving DPD When Due Date Is Missing
In practice, not all invoices in the AR subledger have an explicit due date. When the due date is missing, DPD must be derived from the invoice date plus the payment terms. For example, if an invoice is dated January 15 with Net 30 payment terms, the implied due date is February 14. The DPD as of a March 1 report date would be 15 days. Accurate payment terms mapping is critical, using the wrong terms (e.g., Net 60 instead of Net 30) would shift the invoice from 15 DPD to negative 15 DPD (not yet due), fundamentally changing its eligibility classification. This is why data quality in payment terms and due dates is essential for reliable borrowing base calculations.
DPD in Eligibility and Cross-Aging
DPD drives two critical eligibility determinations. First, individual invoice eligibility: receivables beyond the contractual DPD threshold (typically 60 or 90 days) are automatically ineligible. Second, cross-aging: when the DPD-based past-due ratio for an obligor exceeds the cross-aging threshold (commonly 50% at 90+ DPD), all of that obligor's receivables become ineligible. Monitoring DPD trends at both the invoice level and the obligor level provides early warning of emerging eligibility issues before they impact the borrowing base.