Blue Book Ratings and Scores are based on cumulative reported trade experiences on a subject business by its trading partners and industry relationships. Survey and accounts receivable aging data are key attributes for both the Rating and Score.
The Industry Pay Performance graph (Graph 2) depicts pay performance frequency as reported through Blue Book’s investigation survey methodology.
Pay descriptions are broken into seven distinct categories: AA (1-14 days), A (15-21 days), B (22 to 28 days), C (29 to 35 days), D (36 to 44 days), E (45 to 60 days), and F (61-plus days); are defined as ‘date of invoice – receipt of payment’ and carry their own specific data ranges as specified above.
Year-to-year change is rather minimal for each pay category. The central tendency for payments is to be received in 22 to 28 days (B). Noticeable changes over the period are in the AA, B, and C categories with AA declining from 15 to 12 percent, C declining from 26 to 23 percent, and the largest mover, B increasing from 23 to 30 percent.
Pay reported beyond 35 days, either D, E, or F pay reports, may be reflective of slow performance, disputed files, or price after sale dealings. Industry performance consistency is noteworthy—general assumptions reflect that significant underperformers go out of business rather than erode overall industry averages, and as a whole, industry ratings and score performance is good.
This is an excerpt from the most recent Produce Blueprints quarterly journal. Click here to read the full article.
