LBM dealers say their customers have been taking an average of 45.49 days to pay them in 2012, down from 48.46 days a year ago, according to an August survey in which ProSales
asked dealers how they manage their accounts receivable. Of the sample, dealers with annual revenues less than $10 million (small dealers) said customers paid within an average of 41.47 days in 2012, down from 43.74 days a year earlier. Dealers whose revenues were at or above $10 million (big dealers) reported an average of 47.23 days before payment in 2012, an improvement on 2011’s 50.45.
Dealers use different due dates, so it’s helpful to take each yard’s average accounts receivable days and group them in five-day increments. By that measure, it appears payments are much more likely this year to arrive at the 45-day mark than any other time. View the results here
Forty-five percent of dealers wrote off less bad debt than a year ago while 42% say it stayed the same. Of that sample, 65% percent of small dealers wrote off less bad debt than a year ago compared to 36% of big dealers; one-quarter of small dealers who responded said they wrote off the same amount of bad debt in 2012 as in 2011 while half of the big-dealer respondents said they did the same.
Six in ten overall respondents issued the same number of liens in 2011 and 2012, while 11% issued slightly more and 14% did slightly fewer. Eighty-three percent said they didn’t increase their bad debt reserve in 2012. Four in ten dealers reported altering their collections strategies to make sure their invoices don’t get overlooked.
Strategies being employed include more closely reviewing new-account applicants’ credit histories, addressing past-due balances sooner, invoicing earlier, and tightening credit limits on slow-to-pay accounts.
The data come from a sample of 84 dealers who said they were in some way responsible for their organization’s management, collection of accounts receivable payments, or were involved with the banking relations of their company. Of the group, 23 qualified as “small” dealers with annual revenues of less than $10 million, while the remaining 56 “big” dealers met or topped $10 million. Thirty-seven percent of respondents identified themselves as “chairman, president, owner/partner, EVP,” or another non-CFO corporate executive, while 38.1% said they were a sales manager, outside or inside sales rep.