PRE-XMAS DEBT LEVELS NO SURPRISE

By NZHJ November 29, 2016 Industry news

(Above: Days Sales Outstanding by sector Nov 2015 to Oct 2016.)

Our regular report on debt in the channel from CreditWorks for the month of October shows debt levels remained steady throughout September and October, with exposure on the database at just under $1.7 billion.

However, look for a rise in November debt levelsCreditWorksAlan Johnston says: “This is consistent with last year and, if this pattern continues, we can expect an increase for November as work ramps up in what is hoped will be good work conditions pre-Xmas, weather wise.”

DSO trend steady

The average DSO for the Building Material supply sector eased out over October by approximately three days, with a slight increase also in the Concrete sector. Some improvement was shown in the plumbing sector. However, overall, the trend was steady, as it has been for the last couple of months.

DSO outlook good for now

In terms of an outlook, Alan Johnston says: “I would expect to see good results in the average DSO for November, after which time the Xmas break will impact on December, January and February’s results, as it does each year.”

Maintain vigilance

Still, he warns: “Businesses need to be very vigilant and manage their credit terms tightly through these months, with many other opportunities available to spend the disposable dollar during this time.”

(Below: Total channel debt to Oct 2016.)

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