Collecting Receivables More Difficult

I was on a conference call yesterday with an office furniture dealer that I am assisting with their transition from a bank to an asset based lender. Senior management of the company had complete command over the details of their accounts receivable aging report and answered each question about specific debtors with ease.

While some businesses do indeed watch their receivables like a hawk, apparently that's not the case across corporate America. Many companies are reporting more and more difficulty in collecting receivables. CFO Magazine reports that the National Association of Credit Management Credit Managers Index for March fell to its lowest level since 2002.

Companies could have avoided some of their newfound credit problems if they had taken a closer look at their risk portfolios, according to Pam Krank, president of Credit Department Inc., a credit-management company.

As I've said in the past including just recently, if a business is extending credit terms, you're really a lender. Not necessarily a good place to be if you don't know what you're doing. Good credit and collection policies are an absolute necessity as it becomes more likely that a recession and credit crunch will be having an impact on your customer's ability to pay your invoices when due.

If cash flow gets tight because you're acting like a lender and you need a business loan secured by your accounts receivable, read "Matchmaking for Business Loans" and give me a call!

Tags : CFO Magazine , accounts receivable , NACM , Credit Managers Index , credit and collections