The data, scores, and customer accounts provided sufficient warning and reason for vendors to more closely monitor transactions and outstanding balances with H. Brooks and Company, LLC BB #: 100563 New Brighton, MN.
Although a lot happened in the next 18 months, there were still glimmers of hope that the company could bounce back.
As business information became more variable, Blue Book reached out to company management in late February 2019, sharing that business information was becoming mixed and questioning the company’s XXX C rating.
Management said one of the company’s largest customers was paying slowly but had recently started to speed up its payments. Management believed that the company’s performance would improve as a result.
Despite this outlook, and after further research, business information no longer supported the assigned XXX C and in early March 2019 Blue Book released provisional rating figures (124) (85), meaning “rating withdrawn” and “special report available”. on demand.”
The company’s year-to-date survey data is presented in Table 5.
Although the chargeback data did not change significantly on the surface when compared to Tables 1 and 2, a few compelling things were revealed during Blue Book’s investigation: 1) one vendor indicated that the accounts payable clerk advised the company “didn’t have the money to pay the bill” during the call, adding “maybe next week”; 2) the other vendor indicated that H. Brooks had started writing NSF checks, and 3) the A/R data, although more limited than the survey data, showed signs of greater variability and slower payment performance.
H. Brooks’ Blue Book score decreased from 676 in January 2019 to 661 in March 2019. Blue Book also maintained the provisional scoring numbers (124) (85) until July 31, 2019, when the rating was been revised to (144) XXX148 (149).
The (144) is defined as a “specific estimate of unassigned credit value”, while XXX is defined as good business practice; however, 148 is considered a qualifier and is defined as “having conflicting reports – some report less than XXX experiences”. Finally, the (149) is defined as “slow wage”. Table 6 reflects survey data analyzed at time of rating change.
The produce industry has seen many companies perform and pay in this way. Not all sellers see risk the same way, nor do they have the same risk tolerance; Yet such changes are an important indicator that should alert credit teams to adhere to their policies and deploy next steps as necessary.
This is an excerpt from the Credit and Finance department of the January/February 2022 issue of Produce Blueprints Magazine. Click here to read the full issue.