REDUCED ACTIVITY IMPROVES JANUARY DEBT

By NZHJ March 09, 2016 Industry news

Reduced building activity during the summer months continues to be good for the channel's debt levels.

Alan Johnston at CreditWorks (www.creditworks.co.nz) reports that overall debt levels for January on the CRISworks database (see chart above) are down some 12% on December figures, due to the lighter activity traditionally seen through the first month of the year.

Nevertheless, these figures are still up on all previous years’ levels for January (+7.6% on January 2015 for example), suggesting that growth in the building sector continues unabated.

 

Tough in collections right now

Collections are always tough at this time of the year, for reasons stated in last month’s report.

As a result, aged debt levels and days taken to pay accounts (see chart below) have extended out in pretty much all sectors.

Only the Concrete and Other Building sectors avoided decline, but all other sectors felt the pinch and overall the DSO increased slightly.

 

March to bring improvement?

Looking forward, last year’s February stats suggest this decline will continue and the trending out of aged debt will be evident in next month’s figures, before we see some improvement in March.

Nevertheless, warns Alan Johnston, this improvement can only be expected if credit management personnel maintain a strong focus on this area in coming months.

 


Regular NZ Hardware Journal columnistAlan Johnston is General Manager of CreditWorks Data Solutions Ltd, and has been involved in credit management for 35+ years. CreditWorks is recognised by the NZ Leaders organisation, as Industry Experts. Email Alan at alan.johnston@creditworks.co.nz or call him on 09 520 8133 to find out more. 

share this