So that is one factor in Q3. If you compare Q3 to Q4, to be really frank with you, we had a little bit of a different revenue composition, where we had some clients that just paid a lot faster than we do today, particularly when you start talking about some of the COVID-related revenue, that money was just coming in very, very fast. So the DSOs in Q4 are historically low for us. Certainly a goal for us to get back to those levels where we were in Q4 and we are working like how to get there. But those numbers are historically low. And then if you look at the receivables today and the DSOs today, we have a couple of clients that are really good clients, high-margin clients, particularly in the Life Sciences space that just pay a little like that industry, it is not uncommon to get contracts where these big companies say, payment terms are 90-days, take it or leave it.
If you want the business, you got to wait 90-days. And we have a few clients like that, that are fantastic clients, very profitable, even with the high DSOs, they fit our return models very, very well. So that is one aspect that is contributing to the higher DSOs. Then when you flip over to the EPC clients, a lot of the EPC clients and some of the utilities are also slow payers. But the overall cash flow effect of those engagements are excellent. It is just that when you look at the trade DSOs, you just see they don’t look great. But the overall cash economics for those clients are outstanding. So you have got a couple of factors going on. But I can assure you that, we are working very hard to get DSOs at a much lower level where they were in Q2 and Q3.
Stay tuned.
Unidentified Analyst: Kevin, do we have as you are talking about DSO numbers. So you know where they are. Where were they in Q2 and Q3?
Kevin Miller: Obviously people calculate DSOs differently, right. But you know how I calculate them. They were 84 in Q2. They were 90 in Q3. They were 79 in Q1, and they were at an all time low in Q4 of ’66. So we need to get, some way, somehow we need to get them a lot closer to testing.
Unidentified Analyst: Right. Because I think if we look on the flip side of that on expending capital against debt, there could be a pickup of as much as over a $1 million, $1.2 million EBITDA, if we collect those and turn them down into against the line. Right.
Brad Vizi: Well, it is not going to impact EBITDA. It is really a matter of impacting our interest costs….
Unidentified Analyst: Well – interest costs, right or including EBITDA right. Am I staying corrector no?
Brad Vizi: Yes, no earnings before interest. So, no, it doesn’t impact interest, but your point is a good one. We are very, very focused on cash flow, and the most important measure that we look at this company is return on equity. Like that’s the most important thing and we pride ourselves in having a very high return on equity and this is an important component to it.
Operator: And it looks like though Bill Sutherland had a follow-up question.
Bill Sutherland: Yes, I was curious, Kevin, about the tax rate in the quarter and what to think about for the year.
Kevin Miller: Yes, we had a one-time discreet tax benefit in Q3 that helped us out. But it is just a Q3 thing. I think when you start looking at Q4, you are probably looking at consolidated taxes 28% to 29% roughly. Because I think we are going to have a discreet item that’s going to work the other way. It is going to bump it up a little bit in Q4. Long term, I think 28% is a pretty good rate for you to use in your model.
Operator: [Operator Instructions] Doesn’t look like we have any more questions, so I’ll turn it back over to you for any closing remarks.
Brad Vizi: Okay. Thank you for attending RCM Third
