How can I check a drywall company’s material orders and supplier terms?
Ask for supplier statements and recent purchase orders, then check credit limits, payment terms and any volume arrangements. Find out how much is bought from each supplier and whether the terms depend on the seller. Compare what was ordered with what was billed on jobs.
Start with the supplier list and the accounts payable aging. Are bills paid on time, or stretched? A company that leans on supplier credit may look healthier than it is. Ask whether any supplier has put the company on hold or demanded cash on delivery.
Then look at the terms. Is pricing locked in, tied to volume, or reviewed each season? Ask whether special rates were given to the seller personally and whether they would continue for you. Phone the main suppliers with the seller’s permission and ask how the relationship has gone.
Match orders against job billing. Large gaps between boards ordered and work invoiced can mean waste, theft or underbilling. Ask how deliveries are checked and how leftovers are handled. Last, ask what happens if the main supplier has shortages. Does the company have a second source? A weak supply chain can slow jobs and strain cash. Your accountant can help you read the payables, and your lawyer can review any supply agreement. A final check is how often rush orders and returns happen. Frequent returns can mean poor estimating, and rush deliveries can mean jobs are not planned well. Ask who places orders, and whether that person would stay on after the sale.
Key takeaways
- Review accounts payable aging for stretched or disputed bills.
- Ask if special pricing belongs to the seller or the company.
- Compare materials ordered to work billed.
Related reading
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Sources
This answer is checked against primary sources. Links were last confirmed on the dates shown.
- 01Business Development Bank of CanadaGovernmentHow to diversify your supply chain
- 02Business Development Bank of CanadaGovernmentHow to conduct due diligence when buying a business
- 03Business Development Bank of CanadaGovernmentWhat are the steps to buying a business?
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