It's Payback Time
Are your deadbeat debtors getting you down? Don't get mad, get even.
When the tech bubble burst last year, the accounts receivable at
Lynn Parker's public relations and branding firm started to
accrue so quickly that they threatened the existence of her
business. "We had several hundred thousand dollars in overdue
accounts, and as the dotcoms went belly up, so did our chances of
ever seeing the money they owed us," says Parker, 45,
principal and co-founder of Seattle-based Parker LePla. "It
was a real wake-up call for us. We knew we were going to have to
make collecting accounts receivable a priority."
7.6
million jobs were created by venture capital
invested between 1970 and 2000.
SOURCE: National Venture Capital
Association
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The down cycle hasn't just impacted those providing products
and services to the technology sector. Entrepreneurs in nearly
every industry are feeling the pinch of reduced cash flow as they
wait . . . and wait . . . for payment. In a time when money is hard
to come by for all but the most reliable businesses, letting
accounts receivable pile up could cost you the little cash you have
left to maintain and grow your business.
"Many of my clients are experiencing a ripple effect from
the downturn in the economy," says Los Angeles collections
attorney Richard G. Baumann. "The slow payers make creditors
wary about their own cash flow." Baumann says that in an up
cycle, most entrepreneurs are too lax in granting credit and often
neglect having any infrastructure in place for systematic
collection of overdue accounts receivable. "In a down economy,
business owners shift their operations to focus on accounts
receivable issues that may have been languishing for some
time."
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