Nine Critical Steps To Anticipate & Plan For Economic Stress

Press Release: CMA Offers Tips, Tactics For Hard Times
Burbank, CA – As more and more businesses confront the devastating impact of the recession, executives can take immediate and specific steps to reduce the damage and stave off the worst outcome of all, bankruptcy.

“Pain is inevitable in this economy,” according to Mike Mitchell, President of the Credit Management Association, “but in many cases the most dire consequences of that pain can be anticipated and even avoided. Businesses which plan for and stay several steps ahead of the curve are far more likely to come out of the recession healthier. The benefits of taking action early will serve the business, its employees, its customers and the economy.”
Mr. Mitchell and Mike Joncich, who heads the CMA’s division dealing with bankruptcy and liquidation, agree that nine basic steps must be taken as early as possible.
  1. Recognize the widespread impact of the recession – you are not alone. Too many executives react to bad times by blaming themselves. They try to hide from the problem or avoid hard decisions. It is far better to recognize that the down economy is hurting everyone and face up to the facts early.
  2. It will probably get worse before it gets better. Even though most experts agree that the recession has not yet hit bottom, business leaders tend to rely on hope rather than planning for even more difficult times.
  3. Do not procrastinate. Even in the face of overwhelming problems, solutions exist. Those solutions will not appear out of thin air – they will emerge from
    good planning and long-term thinking.
  4. Keep communications wide open. It is absolutely essential to communicatedirectly, honestly and frequently with customers, creditors, employees and bankers. Each of those groups will welcome honest communication and all of them are too likely to rely on guesses or bad information if executives don’t provide them with an accurate picture.
  5. Talk to your bank about restructuring loans. This will ease the pressure and it will also put you in position to take advantage when the tight credit market eases.
  6. Work with your employees. By getting a commitment for more work or a short-term reduction in compensation, you can insure continued employment, increase production and build loyalty and dedication in your workforce.
  7. Negotiate with vendors. You can extend payments or modify existing terms to insure that your vendors get paid something and become partners in your success.
  8. Get maximum return on Accounts Receivable. You may be able to tighten your terms, eliminate discounts or strengthen your collection systems to improve your cash flow.
  9. Seek equity partnerships. When you’re doing all you can to maintain and strengthen your business, you become a sound investment. If you’ve taken smart steps to anticipate economic danger, your business is a far more attractive prospect for investment.
“Taking these steps now is by far the best course available to most business leaders,” says Mr. Joncich. “Hiding from the problem or waiting until the last minute is the worst choice. Delay is the enemy, action is the ally.”
CMA, the nation’s largest regional professional credit association, delivers a variety of business credit services to large and small companies across the full spectrum of commercial enterprise. CMA members receive education, support services and critical information to meet professional standards and accreditation. In addition, the Association also assists insolvent companies with workouts or liquidation through cost-effective alternatives to bankruptcy. CMA has provided business credit services and support in the western U.S. since 1883.

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