Rob Sabo, Northern Nevada Business Weekly
Nevada businesses are paying their bills faster — but some Reno-area business owners say that’s only because they’ve tightened credit and payment policies to battle overly slow payments and big charge-offs.
Cortera, a commercial credit information company based in Boca Raton, Fla., reported this month that the number of past-due business accounts at Nevada companies during February declined 2.3 percent from December, falling to 17.2 percent from 19.55 percent.
In the Truckee Meadows, Kim Lamberty, vice president of operations for Credit Management Association, which manages collections and other services for about 30 companies in Reno, noticed a decline in 61- to 90-day payments from December to January.
And Western Nevada Supply Credit Manager Jim Dickey says his company has seen a 10 percent decrease in the amount of time it took for customers to pay invoices from February of 2010 compared to the same month in 2009.
But Dickey notes, the number of charge-offs in 2009 as compared to 2008 increased significantly. Western Nevada Supply typically operates on a 30-day net invoicing. It primarily sells to contractors, many of which struggled to stay afloat during the past year.
“Contractors definitely are having a more significantly. Western Nevada Supply typically operates on a 30-day net invoicing. It primarily sells to contractors, many of which struggled to stay afloat during the past year.
“Contractors definitely are having a more difficult time,” Dickey says. “There is less business to go around, the margins they are making are less, and that is putting a big squeeze on what they are able to make and in turn pay their suppliers.
“It is a real challenge to make sure we are paid in a timely or even semi-timely basis.”
To lessen charge-offs, which have had a direct impact on the company’s bottom line, Dickey says, Western Nevada Supply adopted stricter credit policies with some customers. “We are trying to hold people accountable to the terms that we have set,” he says.
It’s a fine line, he adds. Businesses still have to work with their customers to keep them loyal and allow them to do business. “If you become too strict with them, either you run off customers to competitors, or you may force them into insolvency — but if you don’t set some kind of guidelines, you may end up with significantly more in your accounts receivable than you can collect.”