Payment history is the record of a company’s previous payments over a period of time. It shows whether invoices have been paid on time, late or through an arrangement. The analysis looks at payment terms, arrears, frequency of overruns and any collection processes. Payment history provides a factual picture of payment history and is often used as an indicator of future payment behavior. Data can come from internal records or external sources of information.
Context in credit management
Within credit management, payment history is used in underwriting and in periodic reassessment of existing customers. It helps to recognize trends, such as gradually increasing payment terms. Based on this, credit limits or payment terms can be adjusted.
Example
The payment history shows that a customer has paid an average of five days past due in the past 12 months.
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