Tweet
several stores have recently gone out of business in my area and there are rumors of many more about to turn turtle. if you are in the retail biz...
why inflationary? thin rates of change. of the supply of stuff goes away faster than the consumers and their income, you get a 1970s stagflation.
This holiday season, I have an important warning for every small company that sells to large corporations, especially big retailers.
Carefully watch how much they owe you, and do everything possible to collect before December 24. Why? Because I'm afraid the last week of this year will see a number of bankruptcies, even of companies that are household names.
I hate writing a column like this. After all, like most entrepreneurs, I'm an optimist. And I know that when people are fearful, the economy worsens. But my responsibility is to you – my small business reader. And if you sell to a company that goes bankrupt – or if your customers sell to companies that go bankrupt – you could be left in a dire situation.
I'm not alone in worrying about the health of some major companies. Over dinner, a friend told me the large law firm she works for sent a memo with a list of 30 large companies they considered to be risky, warning the attorneys to carefully monitor their billings to those clients. She was shocked at the names on the list – many were stores where she shopped.
In fact, insurance companies that provide "trade credit insurance" are also nervous. This is insurance that large suppliers take out to make sure they'll get paid if something, such as bankruptcy, happens to their customers. These insurance companies are looking at the economic climate, and reducing or eliminating insurance on some companies' receivables.
"Business bankruptcies continued a relentless upward pace in the first quarter of 2008, and data suggests that the trend could increase even further as the year progresses…" That was the conclusion of Euler Hermes ACI, the largest provider of trade credit insurance in the U.S., earlier in the year. The recent financial turmoil has made it even more likely there'll be a rash of business bankruptcies.
Carefully watch how much they owe you, and do everything possible to collect before December 24. Why? Because I'm afraid the last week of this year will see a number of bankruptcies, even of companies that are household names.
I hate writing a column like this. After all, like most entrepreneurs, I'm an optimist. And I know that when people are fearful, the economy worsens. But my responsibility is to you – my small business reader. And if you sell to a company that goes bankrupt – or if your customers sell to companies that go bankrupt – you could be left in a dire situation.
I'm not alone in worrying about the health of some major companies. Over dinner, a friend told me the large law firm she works for sent a memo with a list of 30 large companies they considered to be risky, warning the attorneys to carefully monitor their billings to those clients. She was shocked at the names on the list – many were stores where she shopped.
In fact, insurance companies that provide "trade credit insurance" are also nervous. This is insurance that large suppliers take out to make sure they'll get paid if something, such as bankruptcy, happens to their customers. These insurance companies are looking at the economic climate, and reducing or eliminating insurance on some companies' receivables.
"Business bankruptcies continued a relentless upward pace in the first quarter of 2008, and data suggests that the trend could increase even further as the year progresses…" That was the conclusion of Euler Hermes ACI, the largest provider of trade credit insurance in the U.S., earlier in the year. The recent financial turmoil has made it even more likely there'll be a rash of business bankruptcies.
Comment