High A/R Balances in HVAC/Plumbing?

by a searcher from University of Toronto - Joseph L. Rotman School of Management

2 years ago

Looking at a Plumbing/HVAC contractor that has a large & stable A/R balance with > 90 days outstanding. Is this what others have seen in the industry? Any suggestions to free up capital - tighten A/R, stretch out A/P etc.

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searcher from Hillsdale College

How much of it is bad accounting? If they have contracts that they bill the full thing in advance and get paid in installments, it will look like long-dated A/R but might be right on time. There are a number of ways this can get really tricky, so I'd get them to talk through the entire billing cycle with you rather than trusting the balance sheet to tell you the answer.

2 years ago | like reply | 1 like

searcher from New York University - Leonard N. Stern School of Business

We've been looking into this as well; echo the above in that type of customer / service vs. project work is key here. Construction work will certainly make days AR longer, unfortunately not a whole lot can be done to improve that in this situation

2 years ago | like reply | 0 likes

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