Okay, it’s a shameless plug for the book (Get P.A.I.D. a Guide to Getting Paid Faster) and the system, but it is also a reminder of how important it is for businesses to pay attention to their credit extension, monitoring and collections when things are tight. One might think it is beneficial to extend more credit to buy sales in this atmosphere. In some businesses, in some market segments, that might work. But it is very risky and must be done cautiously and thoughtfully.
In general, businesses are having a tougher time paying their bills. At a minimum, they are saying they are having a harder time and using the economic issues as an excuse (or reason) to hold onto their cash.
Today, a customer of a client told me he could send the $9,000 payment today, but he wanted to hold onto it for a few days just in case. (I read that as “just in case something more pressing requires the money”). He said he’d pay a premium for the few days. I said he was paying a premium since the default interest rate of 18% had already kicked in. He whined, then said he’d send the $9,000 now!