“MODERATE MARCH” FOLLOWS “FAILURE FEBRUARY”

By NZHJ May 04, 2016 Industry news

Following on from “Failure February”, which proved troublesome for some companies operating in and around the building industry, "Moderate March" brought with it some respite.

Above: Total channel debt to March 2016.

Alan Johnston at CreditWorks (www.creditworks.co.nz) reports: “As forecast, we saw a slight improvement in aged debt throughout all building related sectors this month.

"Roofing, Glass and Electrical sectors all exhibited much better performance in the collection area, and reduced their DSO by up to five days in some cases.

“Overall, the average DSO reduced by almost three days, which is quite significant. As a result overall debt levels reduced accordingly.”

What’s the outlook for debt?

Says Alan Johnston: “It would now be my expectation that debt aging will continue to improve over the next couple of months, and then remain reasonably steady throughout  the est of the year.

“Having said that, some sectors – in particular Building Materials and Roofing – are still a way off from where they were at this time last year, and therefore need to focus heavily on debt recovery if they wish to maintain the cash flow levels of 2015."

Above: Days Sales Outstanding by sector, April 2015 to March 2016.

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