Tennant Extends Customer Payment Terms As Sales Decline
Floor cleaning equipment maker is betting customers will eventually pay up as sales fall and receivables rise.
October 27, 2022
Tennant Company (TNC), a manufacturer of floor cleaning equipment, blamed a significant decline in operating cash flows, in part, on increased sales to customers with extended payment terms. In the latest quarter, Tennant’s sales declined 3.3% from the prior year while receivables increased 3.7%.
Though relatively insignificant, Tennant felt compelled to insert new language in the latest quarterly filing reassuring investors:
“We also actively manage our accounts receivable portfolio and expect increased collection activity in the fourth quarter.”
Interestingly, Tennant’s allowance for bad customer debts actually shrank in the latest quarter. As a percent of receivables, the allowance in the current quarter was 2.3%, down from 2.5%the prior year.
It’s either a vote of confidence in Tennant’s customers, or an early warning.
Related: NLFSK, BOBR4, DLG, WM
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