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Time for the Tough to Get Going

February 25th, 2009

CreditToday.net

While very few people anticipated the depth of our current financial crisis, a year ago most recognized that boom times were over and a tougher economic environment lies ahead. In the benchmarking survey we conducted the first quarter of 2008 on the subject of economic risk we asked, “Do you believe we are headed into, or already in, a recession?” At that time 51 percent indicated definitely yes and an additional 35 percent said probably. Of the remainder, only 7 percent did not see a recession on the horizon and another 7 percent were not sure.

Due to their foresight, most credit managers have had time to prepare for a hostile economic environment. “We saw this coming over a year ago and really tightened up credit as a whole. Currently, we are in pretty good shape but continue to be very diligent in monitoring and working all our accounts daily,” says Dan Sproat, corporate credit manager at Wholesale Fuels, Inc.

Looking forward, the challenges facing Wholesale Fuels are a good example of the tough road ahead. “In California we always had one of the big three industries that would survive and carry the economy: construction, oil or agriculture. Now all three have fallen on hard times and there doesn’t seem to be a savoir.

“Also, because of the current budget problems California, our downstream accounts–schools, cities and counties–are unable to pay due to no money flowing from the state or have had their budgets totally devastated. This will be a challenging year indeed.”

There were 165 participants in this year’s risk management survey, a ten percent increase in participation compared to the 2008 survey. The survey is thus able to provide insight into trends related to DSO, bad debts, corporate risk tolerance, and credit department challenges. It also examines the primary activities and initiatives credit executives are pursuing to address these challenges as well as when they expect the economy to begin its recovery.

Read more on CreditToday.net