Slower payments another sign of economic slowdown

It’s more common for client businesses to take longer to pay bills, leaders of several sizable businesses in the Boise area said recently.
Strong account management and continued new-client prospecting can help soften the blow of this and other symptoms of a slower economy, they said.
“We’re still holding our own on collections right now,” Norco Inc. President Ned Pontious said.
Boise-based Norco fields more than 40 locations in six states. The company sells industrial, welding and safety equipment; medical equipment and supplies; and gases for industrial, medical and specialty applications.
“Some of our larger customers are taking a little bit longer to pay,” he said. “I think they’re just conserving cash.”
Office Value Inc., an office supply business based in Meridian, has not had to write off a bad debt so far this year, president Phil Roark said in mid-June. Some accounts in construction and real estate are slow to pay – extending the payment period from 30 days to 60 or even 90 days – but “some are as current as ever in that sector.”
Another office supply business owner, who asked not to be identified, said about six client businesses closed this year.
All but about 2 percent of existing clients remain in good standing, and the others have worked out special payment plans, the owner said. Meanwhile, new-account signings are up by about 20 percent from a year earlier.
“We are gaining new accounts daily,” Roark said. “The existing account base naturally is soft with the economy as it is. Everybody seems to be restricting their additional buying due to the increased cost of fuel.”
Western States Cat, the Caterpillar heavy equipment dealer that is based in Meridian and is building a 12th location in its multi-state region, has not seen a big change in account performance, spokesman Pete Edmunds said.
“In past years as the economy slides, we always tend to see a changing business climate where businesses that are not really strong cannot weather the storm,” he added.
Tom Boyer is president of Treasure Valley Coffee Inc., Boise. Sister companies are Rain Water Refreshed, Treasure Valley Vending and The Roastere.
“When we started in 1984, those were some of the tougher times Boise has been through and I thought business was booming,” he said.
Since coffee and water are an employee benefit, the business often is among the first to feel the impact of an economic swing, Boyer said. “When we see the economy the way it is now, we always strive to acquire new business at an increased rate if we can. So far this year, we’ve done quite well.”
Some businesses are reducing orders – high prices for fuel make business owners increasingly conservative – but others are increasing volumes, he said. The Treasure Valley Coffee family of companies did business with mortgage companies that later downsized, but many remain clients, he said.
At Riverside Management Co., a Boise property management company, President Skip Anderson said business appeared to be increasing in the first quarter. That momentum did not last.
“Shortly into the second quarter, we felt a perceptive tightening of business, people falling behind in their payments,” he said. The trend materialized among renters and among property owners ordering services.
Vendors to property management firms increasingly require advance payment or faster payment, Anderson said. “A few vendors are going out of business.
“It almost appears as though in the local economy, everybody was anticipating an increase in business activity, which didn’t occur,” he said. “Not only did the increase that normally occurs in the spring not occur, but people curtailed their business activity in response.”
Upward-adjusting mortgage payments and a falling housing market turned more homeowners into apartment renters, but that rise in demand was counteracted by increased job layoffs, Anderson said.
Norco’s Pontious said demand remains strong in the company’s home-care medical supply business as the population ages. The company faces Medicare reimbursement rate cuts late this year, and “it means we have to manage smarter and control our costs better.”
As for Norco’s safety, industrial and welding products business, “we think people are buying conservatively based on what they think is going to happen to the economy in the remainder of ‘08 and possibly into ’09,” he said.
Business trends vary by region, said Pontious of Norco and Roark of Office Value. 
Roark said single-digit percentage volume increases materialized in Office Value’s Bend, Ore., and Salt Lake City operations through May, from a year earlier. Business in the Boise area saw a single-digit decline.
Pontious said Norco’s safety, industrial and welding business sees weaker demand in eastern Oregon and eastern Washington, and stronger demand in Nevada, southern Idaho and Utah – as mining and agricultural sectors stay strong.
“We have several building projects going on, probably more than Norco has ever undertaken,” he said. “We’re anticipating a good, strong economy in late ‘09 and 2010. When it turns around, we’re going to be ready.”
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To contact the author, send e-mail to brad.carlson@idahobusiness.net.