Thursday, July 02, 2009

Will California IOUs Impact Your Cash Flow?

The deadline for California to approve an annual budget has passed once again without a final budget. How and when the California legislature and Governator Schwarzenegger will fashion a resolution for the now projected $24 billion deficit are unknown.

Once again, businesses conducting commerce with California that rely on borrowing against their accounts receivable for their cash flow are at risk.

The IOUs that the state may issue in lieu of payment to vendors may not be deemed acceptable for those borrowing against accounts receivable.

If your business is using factoring or a formula driven, asset based line of credit to accelerate cash flow, it is best to check quickly with your funding source and find out their stance on California IOUs. Decisions to accept the California IOUs as collateral will likely be done on a lender-by-lender basis.

By the way, six other states failed to meet July 1 budget deadlines including Arizona, Illinois, Ohio, Pennsylvania, Connecticut and North Carolina.

Need help finding the right lender or telling your story the right way for your California business? Read "Matchmaking for Business Loans" and give me a call!

Tags : California IOUs , accounts receivable , factoring , asset based line of credit , cash flow

No comments: