Solutions to avoid bankruptcy business by john hartley

a lot of  companies are threatened with bankruptcy by the end of 2013. Economic and social evil that feeds a vicious circle from which it is hard to leave. But why so many bankruptcies in so little time ? What really feeds the vicious circle of bankruptcies ?
The extension of payment deadlines kill companies

The leading cause of bankruptcy is based on time of payment. Companies (and government) have treasuries increasingly fragile and play on the extension of time for payment of its suppliers to finance their need for working capital.

But is it really effective?

In doing so, companies opt for the strategy of the ostrich trying to gain time until the situation improves. But the sad truth is that playing with the payment deadlines kills supplier companies. Or what if the suppliers no longer exist ? How to respond with quality customer requests ?

Here is a simplified overview of this vicious circle :

- The company postpones the payment of suppliers

- Its suppliers enter in trouble and die for some

- The company is struggling to answer some customers requests (for lack of providers and partners)

- The company loses customers

- The company enters into difficulty

It is true that some companies have no choice but to postpone the payment deadlines and this article is not intended to attack or condemn. Rather these lines are intended to provide some solutions to try to improve this situation.
Improve its working capital to meet its commitments and build trust with its partners

There are other levers increasing payment delays to improve the working capital of a company. For example, you can try to negotiate payments with your clients to advance a percentage before ordering. You can also try to reduce your stock if you are in a commercial or industrial activity. Frugality is effective under in these times of economic difficulties.

In short, try to activate the levers in front of your business rather than downstream. This will allow you to be virtuous to your partners and create a trust that will benefit you in the long term.
Opt for factoring if you want to get paid faster

If you are a supplier and you are still waiting for payment, there is a simple solution to be adjusted more rapidly factoring. Specialized companies allow you to get immediate payment after billing in exchange for a percentage of sales generated. For example, imagine that you are an officer of a company creating websites. You have a turnover of EUR 100 000 per year and have more and more difficult to get paid by your customers.

Then you decide to work with a factoring company : you charge your customers and are paid directly by the specialized company. It directly manages its payment from your customer. The factoring company is compensated with a percentage levied on your bills. You improve your bankroll and peace through this service.

Besides, who among you has already been opting for this solution ? Do not hesitate to comment on this article to share your experience.