Welcome to the new TCD "Credit Expert" blog! For those of you unfamiliar with TCD (also known as "The Credit Department, Inc"), we're the top commercial, unsecured credit experts in the U.S. managing trade receivables for companies all over North America. Clients hire us to accurately assess credit risk of their customer base (set credit lines) and to ensure their receivables turn to cash as quickly as possible (collect the money). It's not easy work, but we absolutely love what we do here.
This week's topic is: Tis the season to be jolly unless you're a retailer or a creditor!
Just as retailers are reporting weak sales for the holiday season, we've seen some incredible drops in credit worthiness by our client's customers this month. From the outside, the companies may appear to be stable: they continue to pay their bills on time for example. A look from the inside, however, shows us that they've maxed out their bank lines and are struggling to meet payroll.
We expect to see some fallout in first quarter, 2008, when many of these companies will have difficulty staying afloat and will begin defaulting on payments. Some of the businesses are small--less than $50 million in revenue--while others are much, much larger. They're struggling to finance their money-losing operations and it's showing.
We're sorting through the thousands of businesses we analyze to ensure our clients take steps to minimize exposures, including revoking terms where appropriate. We pity the thousands of clueless creditors out there who don't realize what's going on. Most of them won't know until they receive a bankruptcy notice. Yikes!
Are others out there seeing the same things we are? What else are you doing besides updating banking information and analyzing financial statements? Let us know what you're seeing in the rest of the credit world.
Pam Krank
President
The Credit Department, Inc (TCD)
pkrank@tcd.com
www.tcd.com
Thursday, December 27, 2007
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