Dealers differ markedly these days in how quickly they're getting paid and what they have to do to collect on bills, results from a new survey by ProSales show.
On the surface, things look placid: The average DSO for the respondents was 41.75 days in January through June of this year, up marginally from the group's average of 41.37 days for all of 2015. Likewise, two-thirds of respondents said the percentage of lien filings hadn't changed.
But when asked whether conditions had changed among accounts that are at least 60 days past due, 13.2% reported an increase in the number of such accounts and 18.3% said the number of dollars overdue had grown. On the other hand, 30.2% said they were seeing fewer accounts past due at least 60 days, and 27.8% said the dollars due had fallen.
"We are more forgiving than the bank," one dealer quipped.
Likewise, when asked to identify the share of accounts that were at least 60 days past due, 17.6% of the question's 113 respondents said fewer than 1% were while 28.3% said at least 10% of their accounts were two months behind.
Dealers also reported much different experiences when asked whether their customers paid the finance charges that dealers added when the bill was overdue. A total of 16.8% reported that fewer than 1% of their customers skip the finance charge when they pay their late bill, but another 16.8% said more than 10% of their clients stiffed them by not paying the finance charge.
"It's as if most customers don't read the 'Terms and Conditions' of the contract, and even if they do they want to still pay on their terms or claim that the clients bank won't let them draw," said one respondent, who was promised anonymity to encourage responses. "... [T]he customers still want to play games. It's very frustrating and disappointing at the same time."
"Know your customers and their customers!" another advised. "The better you know them, the better you understand their habits. The cream rises and the credit unworthy fall like rocks!"
In general, the results of the survey's payment questions revealed greater diversity than did our questions about customers' credit-card use. (We report those results in a separate article.)
ProSales conducted the online survey on June 6-20. It received 210 responses, but only 162 fit our key criteria of being in the LBM business and also being responsible for the management or collection of accounts receivable payments. Responses came from every region of the country. Revenues were split fairly evenly between firms with $1 million to $10 million in revenue (25.3% of the responses), $10 million to $25 million (27%), $25 million to $100 million (28%), and over $100 million (19%). Sixty-eight percent of the respondents worked at companies that got at least 75% of their revenues from building professionals.