It’s gotten pretty quiet out there about whether businesses can get loans; what was known as the “credit crisis.” It hasn’t loosened up very much. Maybe there is money to lend. Maybe there isn’t. Even if there is, it seems that only those busineses with good credit, good assets and a good business plan will qualify. These are the best risks.
But there is still another credit crisis out there. That is the crisis that small- and medium-sized businesses are facing daily. The question of whether to extend credit to its customers is a daily issue. Can we afford to use up our limited credit line on extending credit to new customers? What if we need it for materials or staff? Or advertising? Are there was to reduce our risks to enable us to get the business without losing our shirts? These are questions that are asked more and more frequently as this recession continues.
Credit managers and other treasury people need to worry about these issues and make decisions based on proper policy, proper risk analysis and proper documentation (when they do lend).
Business owners and managers: make sure you are thinking about this stuff other than when the need is immediate.