"TOLERANCE WILL BE REQUIRED"

By NZHJ April 09, 2020 Industry news

CreditWorks' Feb 2020 DSO & debt stats show some positives following a tough January but March is less easy to predict.

ABOVE: DSO (Days Sales Outstanding) by sector March 2019-February 2020 (Source: CreditWorks).

February 2020’s stats from CreditWorks Data Solutions (www.creditworks.co.nz) show some positives following January turning out, as predicted, to be a tough month for collections.

CreditWorks’ General Manager, Alan Johnston, says of the numbers: “Surprisingly, DSOs improved slightly in February.

“Being a short month, with people still recovering from Christmas and their tax spend, traditionally we see a further weakening through February.

“However the level of work activity in the industry saw debt / sales rise, while payment profiles strengthened a little.”

Looking ahead a little, the impact of COVID-19 will be significant, Alan continues: “Unfortunately, we know now that March is going to tell a whole different story, as we enter into economic hardship like we have never known before.

“Early indications suggest debt is being honoured in most instances, between merchants and suppliers, however customer payments have dried up considerably.

“The coming months are going to see a lot of debt ageing and lower exposure levels (as non-essential building ceases).”

His outlook? “The supply side of the industry is just going to have to be very tolerant in the coming months!”

BELOW: Total debt on the CRISworks database to February 2020 (Source: CreditWorks). 

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