A reader asks what % of uncollected receivables is normal for an out of home company.  Bad debts (e.g. an uncollectible account receivable) should be minimal at your out of home company because you can require payment within 30 days or you’ll take an ad down.  You can also require customers with weak credit history to pay in advance.

Here’s a computation of the provision for credit losses to revenue for the public out of home companies for the 2018-2121.  The provision for credit loss is an expense charge which these companies take in anticipation of having to write off accounts receivable as uncollectible.

• Bad debt provisions averaged 0.54% of revenue for the public US out of home companies.  That’s about one half of one percent of revenues for the past four years.  This is probably a good long term figure to use because it includes three normal economic years and one year of financial distress.
• Bad debt provisions averaged 0.30-0.40% of revenue in the years before covid and almost tripled to 1.16% of revenue during covid.
• Bad debt provisions fell dramatically at the public out of home companies during 2021.  The provision for bad debt was negative at OUTFRONT and Clear Channel which means they experienced recoveries of bad debt that they had originally anticipated.
• The three public out of home companies all have an allowance for bad debt, that is a reserve for potential account receivable credit writeoffs equal approximately 1% of their accounts receivable.

Here’s the data.

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