What would a lender want to know about a drywall contractor’s slow-paying builders?

Bring a receivables aging report that lists each builder and how long balances have sat. The lender will look for a few large, old balances and for patterns. Are the same builders always slow? Do they pay in full or dispute charges? Be ready to explain each old item and what you are doing to collect it.

Expect questions on holdbacks, since part of each invoice may be kept until a project is complete. The lender will also ask how you cover wages and board purchases in the meantime. Describe the credit line, the supplier terms and any cash you keep in reserve.

Show what you do about slow payers: reminders, stopping work, or changing terms. A lender likes to see that you watch this closely. Builders with strong reputations and builders in trouble may be treated differently, so be honest about which is which. Ask your accountant how to present the numbers. If the cash squeeze has been worse in some seasons, say so and show what you changed. Lenders tend to respond better to a plain account of a problem and a fix than to a tidy story that falls apart when they test it against the bank statements. Keep copies of the reminders you sent, so the lender can see the effort.

Key takeaways

• Prepare a receivables aging report by builder.
• Explain each old balance and your follow-up.
• Show how payroll and materials are funded while you wait.