June 19, 2009
OPEN Forum Message
Test Your Business Skills
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A certain business based in North Carolina is facing tough times like everyone else. Its forklifts, once commanding strong prices in good times, haven’t seen demand decrease — just customers’ ability to pay on time. Its cash-flow strategy? Milk the mom-and-pop customers for what they have, and tighten the trade terms (the period during which the company will extend credit while customers get their own cash-flow situation together).
But, for the most part, small businesses report, suppliers aren’t putting the squeeze on their customers — everyone needs the business they can get. Usually, the vendors are putting the squeeze on the suppliers to come in at a lower price point.
Be that as it may, here’s how to manage a bullying vendor who’s pressuring you to pay now:
* Repair the relationship. Don’t let the vendor be the one to notice you haven’t paid your bills. Communicate early and often to keep your business in good standing.
* Renegotiate trade terms.
* Reevaluate your business. Sure, there’s a credit crunch and a draining customer demand in general, but have you done enough to refocus your business in the recession? Not meeting vendor payments could be a sign that you’re still too big.
* Consider additional credit options. If you’re not already doing so, talk to your bank about additional lines of credit, eased under Obama’s small business plan.
* Squeeze your own customers. Least recommended, but when you’re in a corner…
* Consider bankruptcy. At the end of the day, you might just be too buried under vendor obligations. At that point, meet with a bankruptcy lawyer to explore options.
Check your balance, review recent transactions and pay your bill on the go.
