What started out as a subprime mortgage mess is now spilling over into other areas of our economy. Credit card delinquency, car loans, businesses closing, layoffs and much more still to come. Not very promising to say the least.
Some facts:
- Unemployment for December 2007 reached 5% according to the U.S. Department of Labor.
- The manufacturer’s index fell below 50 for the first time in 11 months.
- Bankruptcies rose by more than 40% in 2007 and continue to grow in 2008.
- Subprime mortgage fallout continues into 2008
Now that these items are on the front page of every major newspaper across the nation as well as on the news each night, business owners everywhere are scrambling to make sure they have a tight credit policy in place. During a recession, a tight credit policy is one of the only things that can save you from going under. If your cash flow is tight, take a look at who owes you money, add it up. It’s much more than you thought, put some effort in trying to collect those funds and you will add a bit of cash flow to your bottom line that you don’t have now.
Keep an eye on any credit approved customers and don’t extend credit blindly. Extending credit to unapproved customers or to customers that owe you money can contribute to the downfall of your business, as we move forward into a recession.
Keep your eye on your money! Remember when you extend credit, you are lending money to your customer. Think thrice before doing that in these troubled times.
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