The recent decline in house prices and consumer confidence suggests households may become more cautious about their spending at a critical juncture in the US economic cycle as tightening credit conditions continue to threaten growth.
Many business owners are not paying much attention to this unless they are in the construction, mortgage, lending or housing industry. This is a big mistake. Consumers will continue to get more and more cautious with spending therefore spending less than we may have anticipated.
When consumers lack confidence the economy is effected by less spending and more saving by consumers who are having trouble paying their bills and even by those who don’t. This affects businesses worldwide. Now is the time to make sure your credit policy is in place and being enforced. Make sure to check every new customers credit and keep a close eye on new accounts. You should also keep a close eye on accounts that may be getting a little over due or accounts that might be getting overdue where they have always paid on time before.
The way to protect yourself and your business is to practice “preventive maintenance”, keeping a close eye on your accounts receivable and having an iron fist with your credit policy.
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