Abnormal payment behavior consistent with reports of reduced holiday inventories
QUINCY, Mass. AND BOCA RATON, Fla. – December 3, 2009 — Cortera™, a community-driven business information company, announced the publication of its November 2009 Supply Chain Index™ (SCI) report, a monthly index of accounts receivable (A/R) activities covering manufacturers, distributors & wholesalers, retailers, services, and transportation companies. Measuring payment activities of approximately 350,000 businesses, the November SCI indicated the speeding of payments and related cash flow throughout the overall supply chain, a condition that typically occurs in the months following a holiday shopping season. The unusual occurrence likely supports reports of retailers and suppliers reducing inventories this holiday season with little expectation of replenishing goods once those inventories are exhausted.
Data from the prior month (Cortera’s October 2009 Supply Chain Index) had revealed a slowing of payments consistent with a seasonal pattern seen over the past couple of years (2007 and 2008), as manufacturers, suppliers and retailers take on additional trade credit related debt in advance of the holiday shopping season. However, in the past, such seasonal delinquencies often continued over several consecutive months, continuing throughout the holiday season and typically returning to normal levels in January, as the cash received from sales flowed back through the supply chain. The latest data represents the fifth time in the last six months that the Cortera SCI has revealed improving cash flow conditions throughout the supply chain, though the SCI remains 20 percent higher than pre-recession levels of two years ago.
“The speeding of payments is a positive although highly unusual development for this time of year. The latest data suggests a unique balance between the fresh lessons from the past holiday season and cautious optimism to meet conservative sales expectations,” said Jim Swift, president and CEO, Cortera. “This would seemingly support widespread reports of tighter, controlled seasonal inventories this year. The big question now is whether we see an uptick in December caused by optimistic replenishment and higher confidence in additional holiday sales.”
The Cortera SCI tracks late payments against agreed upon terms, measuring late accounts receivable (Late A/R), excessively late accounts receivable (Late A/R >30 days), and overall average days beyond terms (Average DBT). A two year view of this data is available on Cortera’s website. The Cortera SCI report is published monthly.
In a sea of business information providers, Cortera is different. With over 15 years of experience serving finance professionals, Cortera combines premium business information and innovative tools with a fresh community approach to commercial credit. It represents the first community for small business credit reporting and a fundamentally new way to capture the collective insight of millions of financial transactions. As a result, small businesses can make smarter, informed decisions to ensure optimal cash flow while attracting more favorable payment terms from existing and potential business partners. Free credit reports on millions of businesses are available at http://start.cortera.com.
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