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Monday, October 3, 2005

Protecting Your Company from your Customer's Bankruptcy

Almost every business will suffer through a customer’s bankruptcy at some time. But, the better positioned you are for that eventuality, the better the chances you will not be harmed. Here are some helpful hints:

•Don’t Ignore the Warning Signs! Normally, there are warning signs that your company is, for some reason, ignoring. Of course, the best strategy is to not let a customer get too far behind. The goal is to manage credit risks to minimize the amount a customer who eventually files bankruptcy owes to your company. Watching cash flow and accounts receivable closely is very important. Make sure your company has established guidelines for doing business with customers on credit. When a customer exceeds those guidelines, be prepared to draw the line.

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