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Are Your Customers Taking Longer to Pay Their Invoices? How the International Credit Crisis Affects Even Solid Businesses
By Cassandra Consiglio - President, Pyx Financial Group
Even solid companies are feeling the pressure,
and the headline in the March 9 issue
of Business Week said it all: “Getting tough
with customers — A surge in unpaid bills is
forcing companies to demand cash up front.
Collection agencies are busier, too.”
You might be noticing that customers are
slower to pay these days, or are not paying at
all; this is what we’re noticing with our clients.
For example, even blue chip customers like
the State of California have stopped paying
many bills because of its ongoing fiscal crisis.
Here in B.C., one company was surprised
to have a local government pay an unexpectedly
small downpayment on a large contract,
throwing a major wrench into the company’s
cash-flow management strategies.
As customers “elongate” their payment plans up to 90 days and beyond, we’re seeing a major increase in inquiries for our accounts receivable financing and consulting services. There’s also an expanded use of collection agencies. The surge of unpaid bills is forcing companies to demand cash up front.
One problem with the international “credit” crisis is that it’s misnamed. It’s actually a crisis of “cash flow,” in which solid, profitable businesses are hitting the wall because their customers are suddenly delaying payment, not paying at all or going bankrupt. People see scary headlines and think, we’d better conserve cash, so they start stretching out payments to their suppliers. These days, big companies and little ones alike are holding back or paying only small deposits, finding all sorts of reasons to hoard cash.
For businesses today, the old adage “cash is king” has now become “cash flow is king.” What to do? Suddenly, getting cash in the door and managing accounts receivables has taken on strategic importance. These days, “spray and pray” — whereby you simply send out your invoices and hope something comes back in the mail — is no longer enough. A more professional and targeted accounts receivable approach is now critical to your firm’s financial health. In addition, you may have need for our factoring accounts receivable financing that pays cash for your invoices immediately. This enables your company to continue growing and doing business in these challenging economic times.
Contact Us
Cassandra Consiglio
| Vancouver Calgary Toll-free Fax |
(604) 984-7334 (403) 263-3838 (877) 904-7334 (604) 984-7734 |
