Question for small business owners

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As we head into the home stretch of Y2k mania I'm curious how small businesses especially are planning to collect receivables that will be created in Nov. and probably not due until sometime in Jan. In my case, I have a combination of customers (some good pay, some average) all over the country that have been with me for years. The dilemma I see is if I start to limit credit or decrease shipments they may vote with their feet down to the competition. The flip side is if the banking system as a whole develops serious glitches then I'm hung out to dry until???????? Just curious if anyone else is having these same thoughts?

-- jb (jb40@hotmail.com), October 14, 1999

Answers

My former business that I sold last year, was building wild electronic retail in-store displays for car and home audio. Nine years of system design, many,many small and medium audio business that are still up and running today. AND NONE OF THEM HAVE A CLUE. When I talk to the owners about Y2K concerns, the general thought is O THATS NOT A PROBLEM. Every one of those stores WILL-NOT FUNCTION after rollover! and Im only talking about those electronics...what about the rest of it?...---...

-- Les (yoyo@tolate.com), October 14, 1999.

I am building cash as a reserve. It can't hurt. I too am worried about payments, most of my clients are big corporations, but even really big ones pay net30 more like net60, and when the market goes down the comptrolers seem to just stretch out the payments.

I expect some to be real slow slow payments in December and slower to non existant in Jan.

Good Luck

-- Helium (Heliumavid@yahoo.com), October 14, 1999.


I sell a big ticket service to home owners and small business. ($2500.00-$25,000.00) I have noticed a drop in busines of about 35% this year. This makes me believe that many people are taking these times of Y2K and Dow market worries very seriously. I have noticed a large increase in product costs of around 10% in the last 2 months. They say there is no inflation.

I decided to take an extended 6 month vacation in order to do away with this problem that you are speaking of. I tell my customers that we are booked up and will be until April 1, 00. All of my accounts receivable will be in by December 1, 1999.

If Y2K is a 2 then next year should be an explosive year for all business. I believe it will be a 7 to 8. If so I get to retire at the young age of 38.

Good Luck to You and Yours,

Mike

-- flierdude (a@a.a), October 14, 1999.


forgive me, but extending 'credit' went out with the Pony Express!!!

...cash and carry, or take your business elsewhere...

make whatever reasons or excuses you have to, but extend no credit!

unless you ARE a bank, you are not a bank, you finance no projects!

your function in life is to offer a product or service no one else can; NOT to function as a loan company...and fund the doing of the work, too!

[have I been burned? you betchum, Red Ryder...does a couple $$Mill sound right? ]

start good habits and they will serve you well - "cash and carry".

Seriously, if you have anything on the books now, allow me to suggest that you do what-the-hell-ever-you-have-to, to collect as much of it as you can without getting thrown in jail. Plead, lie, whine, threaten, break some kneecaps, schmooze - but collect that money that is owed you - NOW.

Discount it if you have to, take in-kind trades if you have to; barter, gold, food, vehicles, guns, chain saws, - but collect what is owed you - NOW.

1) make a plan

2) set a firm date i.e. 1999, November 15.

3) make those phone calls and follow up with letters

4) in the meantime do the best-guess as to what you can do to turn those receiveables into MONEY; CASH; GOODS, not some damn ink on a piece of paper [contract, note, invoice, IOU, etc].

5) then put on the pressure or sweet talk, whatever...

6) NO procrastination - just DO IT!!!

7) plan on being fully collected on or before 1999 December 1; or write off the notes as bad debts - forget them. [ carry NOTHING over into the new year - not even the 'hope' of collecting anything...]

Period.

Good luck - [you'll need it!]

Perry

-- Perry Arnett (pjarnett@pdqnet.net), October 14, 1999.


Thought about that problem quite a bit. 75-80% of our customers are local, but the remainder include some very large national firms. I'm very concerned with that 20-25%. We have pulled a goodly amount of cash out of the bank to have as a reserve (converting some to precious metals). By doing this we hope to avoid cash flow problems if we run into trouble collecting receivables.

If things start to look real hairy as we get into December, then we may have to require cash payment upon completion of services. I know we may lose some customers, but that's OK. Losing receiveables is not my idea of charitable work!

-- TM (mercier7@pdnt.com), October 14, 1999.



Making sure all AR's are in by year's end are fine,,, if it can be pulled off. I'm pursuing agressive collection of accounts as we head into the years' end - & I've made sure I'll have no outstanding AR in cash accounts by altering terms of sale. But....

What about the other 95% of my business which is consignment? At any given time over a year's worth of labor is out there in the world awaiting a buyer.

I just figure that anything over a 2-3 y2k will mean that year's labor and costs will be non-recoverable.

Hell, even in good times its takes anywhere from 60 days to nearly a year to be paid. Net 30 hasn't been real in over 10 years. Except to _my_ suppliers. I've had clients go belly up or disappear, never getting product back, never being reimbursed for sales prior to their demise. Guess who is left holding the loss? Legal recourse rarely works. I don't anticipate it working any better post y2k.

-- Mitchell Barnes (spanda@inreach.com), October 14, 1999.


suggestion :

change 'consignment' to 'cash deposit with order, balance due when sold'; then set the deposit fee at your cost of mtls and labor plus 15% or so; i.e. 65% of retail.

if you get the balance when sold, that's profit; if not, in the meantime, you've eaten.

the thing to remember is that these are NOT the 'good ol' days';

the key is to "Adapt and Survive."

that means, "whatever it takes! "

think like an amoeba...

I was once a Project Manager for a company who sold a small discretionary item to jobbers and wholesalers on terms of "3%-10, Net 30"; 97% of the accounts were paid in 12 Days!!! what a cash cow that was!

if they can do it so can you.

figure out a way...

-- Perry Arnett (pjarnett@pdqnet.net), October 14, 1999.


I work for a small, strongly DGI and DWGI electronic publishing firm. One of our big contracts just paid 1/2 the contract and 1/2 the bonus and said that they would pay the other half on Dec. 31, 1999. Guess who's going to get screwed!!?? My colleagues have their heads firmly entrenched in the sand. (In fact, my closest colleague who has pooh-poohed my concern about y2k, was just bragging about how much he paid to have his yard landscaped...) I fully expect that we will begin a downward spiral this fall and that by December we will be in dire straits indeed. Since I work for an hourly wage, I think I will put in some extra hours in October and November... Collect while I can...

-- Libby Alexander (libbyalex@aol.com), October 14, 1999.

I too have several large national customers. They are running anywhere from two weeks to 45 days out but are still paying very well. I'm going to risk it all the way with them simply because all I am risking is my lost time. They are paying me so much I don't want to rock the boat. We are debt free(except for 1 card) and have socked away cash. If everything goes up in smoke we'll adapt. "hey, I'll fix your tractor (or generator) for that cow"

-- dozerdoctor (dozerdoc@yahoo.com), October 14, 1999.

You worry about your receivables. 100% of my business is with the State of South Carolina. If they renege, I'm out 100% of my A/R.

Not sleeping well at all. Got Maalox?

-- Lobo (atthelair@yahoo.com), October 15, 1999.



I know from diddly about running a business. But I've read that there is a market for receivables -- at discounted prices of course, otherwise the buyer would have no incentive.

Wouldn't this be a present option for a lot of folks now holding receivables? So you lose something -- but you don't lose it all.

-- Tom Carey (tomcarey@mindspring.com), October 16, 1999.


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