Sunday, July 18, 2010

Does it still work this way? - When the Architect gets paid, the Reprographer gets paid?

In an article posted on the AIA's web-site in late June, Jennifer Riskus, AIA's Manager of Economic Research, wrote an article that talks about business conditions in the Architecture industry, including insights into the ABI AIA Index, the commercial real estate lending environment, and "accounts receivable collections." The article includes charts and graphs.

Here's the title of that article:

ABI Slips Slightly in May as More Firms Experience Softening Business Conditions
More than 60% of firms anticipate being able to collect nearly all current outstanding receivables

By Jennifer Riskus, AIA Manager of Economic Research

And, here is an excerpt from that article:

Most firms anticipate collecting majority of outstanding receivables

As the economy has begun to improve, nearly half (40%) of our survey panelists reported that the outstanding time for previously invoiced receivables on active projects averages 30 to 60 days. Just 14% indicated that it was 90 days or more. The average number of days outstanding was approximately 60, although that time is shorter for firms in the West (53 days) and longer for firms in the Midwest (60 days). Small firms, with annual billings of less than $250,000, are also reporting shorter outstanding times for receivables while the largest firms, with annual billings of $5 million are reporting the longest times (43 and 69 days respectively).

In addition, more than one quarter of respondents (28%) anticipate that they will collect all of their current outstanding receivables, while an additional 35% expect to be able to recoup more than 95%. Fewer than 10% expect that they will never collect 25% or more of their current outstanding receivables. In the Midwest this share is higher: 15% of firms anticipate they will lose more than a quarter of their current outstanding receivables, compared to just 4% of firms in the Northeast. Firms with less than $1 million in annual billings are more likely than larger firms to report that they expect to collect all current outstanding receivables, but they are also more likely to anticipate that they may lose out on 25% or more of their current outstanding receivables.

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You can read the full article at this Internet address:

Joel's comment:

Years ago, when we were a small, young company in the reprographics industry, our cash-flow (collections of A/R) was highly susceptible to our customers' A/R collections activity. When the Architect did not get paid, we did not get paid. When the Engineer did not get paid, we did not get paid.

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