U.S. companies taking longer to collect bills: data

By Scott Malone

BOSTON (Reuters) - As the U.S. recession deepened late last year, it took 9 percent longer for businesses to collect money they were owed as customers held onto their cash.

That presented corporate America with a conundrum: Each company's desire to protect its own balance sheet by holding out on paying bills caused ripples of pain through the economy as other companies made the same decision.

The 1,000 largest U.S. companies took an average of 39.7 days to collect on sales in the fourth quarter, up from 36.4 days a year earlier, according to the data from Hackett Group Inc (HCKT.O) unit REL.

Automakers, homebuilders and makers of durable goods like home appliances faced the most dramatic increases.

"Companies are trying to hold on to cash as much as they can so they're delaying payments to suppliers, which is having a subsequent impact on the ability to collect receivables," said REL President Mark Tennant. "It's a win-and-lose game, really, in that you're holding on to your payments to suppliers but your customers are holding on their payments to you."

The amount of time it took to collect spiked higher in the fourth quarter, following the bankruptcy of Lehman Brothers Holdings (LEHMQ.PK) and the near-lockup of credit markets.

Inventory on hand also rose 17 percent, to 28.2 days worth, from 24.1 days a year earlier.

A preliminary analysis of the first quarter run for Reuters showed that the number of days it took to collect on sales eased slightly to 39.5, while inventory spiked up to 31 days.

"If you make the wrong thing and sales reduce, you sit on it for a long time," Tennant said.

REL's analysis is based on data taken from filings with the U.S. Securities and Exchange Commission.

HOMES AND AUTOS THE WEAK LINK

Makers of products used in homes and automobiles -- two sectors hit hard by tight credit markets, rising unemployment and falling consumer confidence -- saw the sharpest increases in the amount of time it took them to collect.

Homebuilders like Pulte Homes Inc (PHM.N) and makers of household durable goods, such as toolmaker Stanley Works (SWK.N), ended the year with 27 days of sales outstanding, up from 15 a year earlier. Automakers, such as General Motors Corp GM.N and motorcycle maker Harley-Davidson Inc (HOG.N), had 21 days outstanding, up from 15. Building products makers, including Lennox International (LII.N) and USG Corp (USG.N), took 40 days, up from 31.

On the other end of the spectrum, airlines -- including Southwest Airlines Co (LUV.N) and Continental Airlines Inc (CAL.N) -- cut their days of sales outstanding to 10 from 11, while oil and gas companies -- including Valero Energy Corp (VLO.N) and Marathon Oil Corp (MRO.N) -- went to 32 from 36.

CASH IS KEY