I am getting calls almost daily from clients and prospective clients trying to protect themselves from high outstanding receivables, vendors declaring bankruptcy, and cash flow shortfalls. As these trends have come on quickly and relatively recently for many of these businesses, they do not have structures and systems in place to ensure collectability of receivables and adequate cash flow reserves. I have counseled companies on how to collect on bad debt and manage bankruptcy proceedings but more importantly, how to proactively create processes to protect against high receivables. Steps as simple as ensuring that contracts have penalty and interest provisions and actually insitituting them, obtaining personal guarantees from other business owners, and billing and collecting more frequently can drastically reduce the outstanding receivables and bad debt. In reading the April 2009 Seattle Business Monthly, I encountered “A Recession Checklist” which outlines these, among many other, ways a business should position itself to ride out the recession.
by Michelle Bomberger | March 19, 2009