Tuesday, September 12, 2006

The Tipping Point - When Will Credit Tighten?

The front page of the September issue of Business Credit and Collections discusses the Turnaround Management Association's (TMA) 2006 Trend Watch Poll on credit availability.

In the poll, 90 percent set the tipping point for some tightening of credit when the prime rate hits 9.5 percent. At a prime rate of 10 percent, 65 percent of respondents thought a substantial credit tightening would occur.

TMA members also see debt default rates increasing in the near term for underperforming, highly leveraged companies. Ninety percent of respondents expect default rates to climb by the end of 2007 with 60 percent believing a blow-up could occur as early as mid 2007.

It's never a bad time to re-focus on improving your company's cash flow and doing those things which can make you more bankworthy! Don't be one of those companies that feels the pain when the tipping point occurs!

In your opinion, what's the tipping point for when credit will tighten? How will it affect your company?

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