How do I check a garden centre’s landscaper and contractor accounts?

Landscapers and contractors can buy large loads of plants, soil, stone and supplies, often on account. That is good volume, but it brings credit risk. Start with the accounts receivable report. Which accounts owe money, how old are the balances, and has anything been written off? A few large overdue accounts can change how you read the shop’s profit.

Look at concentration. If a handful of contractors make up a large share of summer sales, find out who they are, how long they have been customers and what keeps them. Ask whether they would stay with a new owner.

Ask what terms they get. Trade discounts, volume pricing and delivery arrangements can reduce margin. Check whether the terms are written or understood. Also ask about the other side: what the shop owes its own suppliers, since late-season purchases may be unpaid. Last, ask how credit decisions are made. Does the shop check a new contractor, ask for deposits or stop sales when an account is overdue? Your accountant can help you read the receivables and decide how they should be treated in the deal. Ask to see any account the owner has stopped selling to.

Key takeaways

• Get an aging report on contractor balances and ask about any write-offs.
• Check how much of the busy season rests on a few trade accounts.
• Ask what discounts and credit terms apply and whether they are written down.