How do I judge the backlog of orders awaiting delivery at a door installation company?
Split the backlog into orders that are paid and confirmed, orders waiting on a supplier and orders that have gone quiet. Then check the age of each group against what customers were told. The mix matters more than the size of the pile.
Ask for the full order list with dates: when each sale was signed, what deposit came in, when the order went to the supplier and the promised install date. Old orders with no movement may point to a supplier problem, a customer who has lost interest or a measurement that was never confirmed. Each of those needs a different follow-up.
Then see how the backlog connects to the money. Deposits already collected are a liability until the doors are installed, so check how they appear in the financial statements and whether cash from them has already been spent on running the business. If so, the buyer may have to fund work the seller was already paid for.
Finally, talk to the supplier about lead times and any orders on hold, and call a few waiting customers if you are allowed. A backlog that grows because crews are short is a different story from one that grows because the shop is busy. Your accountant can help read the deposit treatment. Ask also whether any large orders were pulled forward or discounted to build the backlog before a sale, since that inflates how busy the shop looks.
Key takeaways
- Request a dated list of every open order, with deposit and supplier status.
- Treat stale orders as questions, not as secured work.
- Check where customer deposits are recorded and whether the cash was spent.
- Ask the supplier about lead times and orders on hold.
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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 conduct due diligence when buying a business
- 02Business Development Bank of CanadaGovernmentWhat are financial statements?
- 03Business Development Bank of CanadaGovernmentWhat are the steps to buying a business?
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