Days Past Due
Definition
Days past due, or DPD, measures how late a payment is compared with the contractual due date or other agreed aging convention. It is a basic input for delinquency reporting, eligibility tests, default definitions, charge-off policies, and servicing triggers.
Why it matters
DPD turns payment friction into measurable credit data. In private credit, the same borrower can be described as performing, delinquent, in grace period, in default, or in workout depending on the DPD threshold and contract definitions. Investors need the exact convention before comparing platforms or pools.
Common misconceptions
- •DPD is not always measured from the same starting point across asset classes.
- •A grace period can delay default status without eliminating payment stress.
- •A restructured account may reset DPD even though historical stress remains relevant.
- •Partial payment does not necessarily cure delinquency; the contract and servicing policy determine whether unpaid scheduled amounts continue aging.
Technical details
Measurement conventions
Loans usually age from a scheduled payment due date. Invoices may age from invoice date or due date. Merchant cash advances may use remittance interruptions rather than a fixed monthly due date.
A 30 DPD threshold can mean very different things for a weekly remittance product, a monthly amortizing loan, and a net-90 trade receivable.
Structural consequences
DPD thresholds can make collateral ineligible, trigger cash sweeps, increase reserves, require servicer action, or move a deal into default reporting.
Later-stage DPD buckets usually have lower cure rates and higher loss severity, but the relationship depends on collateral type and servicing intensity.
What to ask
Is DPD calculated before or after grace periods?
Are partial payments enough to keep an account current?
Are modified or extended assets reported using original terms, amended terms, or both?
DPD calculation example
If a payment due April 1 remains unpaid on May 16, it is 45 days past due when measured from the contractual date. A ten-day grace period may delay late fees or default remedies but does not necessarily change the aging calculation.
For multiple missed installments, systems may age from the oldest unpaid contractual amount.
Cures, re-aging, and modifications
A cure generally requires enough cash to bring all required payments current. Re-aging resets the reported delinquency clock, while modification changes the contractual schedule going forward.
Investors should retain original DPD history and separately flag re-aged or modified assets so servicing relief does not erase prior stress.
Collateral and control diligence
For Days Past Due, start with the asset schedule and the control package. Confirm borrower, obligor, collateral type, eligibility rules, lien priority, perfection, account control, reporting cadence, servicer duties, and who can redirect cash after a default or trigger event.
Eligibility is often the most important protection. A receivable, loan, or asset may be excluded because it is aged, disputed, concentrated, ineligible by geography, subject to setoff, unsupported by documentation, or already pledged elsewhere.
Review whether the lender can independently verify collateral through bank data, invoices, title records, servicer tapes, field exams, appraisals, or third-party reports. Borrower-prepared reports without verification deserve a larger haircut.
Metric definitions and worked reconciliation
Rebuild the reported metric from source data. For delinquency, start with the full loan tape and aging policy. For borrowing base or advance rate, start with gross collateral, remove ineligible assets, apply haircuts, concentration caps, and reserves, then compare with funded debt.
Example: a $20 million receivable pool at an 80% advance rate suggests $16 million of capacity. If $3 million is over 90 days, $2 million is concentrated above caps, and a $1 million dilution reserve applies, eligible collateral may support only $11 million of borrowing.
Document whether charge-offs, modifications, deferrals, renewals, loan sales, or repurchases are excluded from the numerator or denominator. Definitions can make performance look cleaner than cash collections justify.
Trigger behavior and lender remedies
Map what happens when the metric deteriorates: availability reduction, cash dominion, reserve increase, borrowing-base deficiency cure, default, amortization, collateral substitution, servicing transfer, or workout handoff.
The timing of enforcement matters. A monthly borrowing-base certificate may lag real deterioration by weeks; a quarterly covenant may lag by months. Test whether the lender receives enough information to act while collateral still has value.
Review waivers and amendments. Repeated waivers can preserve a borrower relationship but may also hide a deteriorating collateral base and reduce recovery for noteholders.
Monitoring dashboard and red flags
Track beginning collateral, additions, collections, payoffs, delinquencies, defaults, recoveries, charge-offs, ineligibles, reserves, utilization, excess availability, concentration, and debt outstanding. The dashboard should reconcile to cash, not only to balances.
Red flags include rising early-stage delinquencies, slower collections, growing ineligibles, repeated collateral substitutions, unexplained reserve releases, borrower-prepared tapes with no verification, servicer changes, and utilization near the borrowing base.
Stress cases should combine lower collateral value, slower liquidation, higher expenses, legal delays, and weaker recoveries. A single mild stress can make a secured loan look safer than the actual downside path.