Follow-up research by the credit management firm BlueTarp is helping explain the company's finding that professional builders and remodelers are paying their suppliers more slowly these days. In essence, the share of late-payers with the worst scores is increasing.
BlueTarp, which provides credit management services for more than 2,000 building material suppliers that collectively have more than 120,000 customers, researched the issue in recent weeks after we published a report that examined changes in the percentage of pros who were at least one day late on paying their bills. That chart, published Jan. 16, compared payment histories with customers' performance in June 2012. It not only found that dealers' customers were more likely to be late during the holiday and winter seasons, it also showed payment performance for all months growing progressively worse.
When ProSales asked why, BlueTarp returned to its records and sorted the late-payers into six categories. from low to severe risk of being tardy.That analysis found the percentage of late-payers in the three worst categories had risen from 15.3% of the entire group in 2012 to 21.9% in 2013 and 25.9% in 2014. Here's the relative percentage of all six groups for those three years:
Management experts often say that the early months of an economic recovery can prove deadly for some companies because they lack the ready cash needed to fund their operations once demand returns. That cash-flow shortage often leads to problems keeping up payments for supplies. Those difficulties might be happening with a certain class of pro customers right now.