Executive Briefings

Companies Take Longer to Pay One Another in U.S. Now

As the world economy slows, the number of people who have fallen behind on loan and credit card payments is soaring. But although dud consumer loans have attracted much attention, individuals are not the only ones failing to pay on time. Firms are struggling too.
A recent survey of large public companies in America conducted by REL, a consultancy, and CFO magazine, highlights this trend. It shows that "days' sales outstanding" (DSO)--or the number of days it takes companies to collect money owed to them, often by other firms--hit an average of 41 in 2007, up from 39.7 in 2006. That might not seem a big increase, but the indicator has rarely risen or fallen by more than half a day a year. When America went into recession in 2001, DSO averaged 38.9.
Source: The Economist, http://www.economist.com/business/displaystory.cfm?story_id=12070713

As the world economy slows, the number of people who have fallen behind on loan and credit card payments is soaring. But although dud consumer loans have attracted much attention, individuals are not the only ones failing to pay on time. Firms are struggling too.
A recent survey of large public companies in America conducted by REL, a consultancy, and CFO magazine, highlights this trend. It shows that "days' sales outstanding" (DSO)--or the number of days it takes companies to collect money owed to them, often by other firms--hit an average of 41 in 2007, up from 39.7 in 2006. That might not seem a big increase, but the indicator has rarely risen or fallen by more than half a day a year. When America went into recession in 2001, DSO averaged 38.9.
Source: The Economist, http://www.economist.com/business/displaystory.cfm?story_id=12070713