Credit Policy for businesses and how to extend credit and manage credit risk

As you know Foreclosures are at the highest levels in modern history.  I recently learned about a website that provides foreclosure details by State across the United States.  I tried out the site, which is called RealityTrac.com and searched for foreclosures in my county here in New Hampshire.

RealityTrac turned up 55 properties that are in foreclosure in my county, 29 at auction, 2 taken back by the bank, 18 for sale by owner, and 6 for sale by the bank.  This may not seem like much but I am in a small town and I can tell you that when I drive through town, all I see are for sale signs in front of houses and businesses everywhere in this area.

I did a random search and found that Ohio has suffered more foreclosures than any other state except California and Florida, Ohio saw 44,594 homes go into foreclosure in the first six months of 2007!  RealityTrac.com recently ranked Cincinnati the 30^th worst city nationally with one foreclosure for every 145 households.  Six of the worst cities included in the survey were in Ohio.

According to the most recent survey by the Mortgage Bankers Association, the foreclosure crisis is deepening, may states saw foreclosure rates skyrocket last quarter.  The problem is expected to get worse before it gets better.

Keeping up to date on the foreclosures happening nationwide and in your area is crucial to your business. We are headed for a recession that most news programs want to pretend isn’t happening, as you can see by reading the newspapers, watching the news and tracking your customers spending, a recession is going to hit us and hit us hard. Many people are already affected.

You need to take some steps BEFORE your business is in a cash flow crisis, make sure you have all of your credit approved customers accounts up to date and paid off in full. If anyone is past due, take steps NOW to resolve any issues.  Go through all your credit approved customers and make sure you have a current and up to date credit application, as well as a credit limit that works well for them and for you.  Watch customers who may be in danger of losing their jobs or their homes.  If this happens they will not be able to pay you.