Navigating a new normal How the economy is changing fathers, families, and future expectations.
Navigating Financial Risk In A Rebounding Economy
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Navigating Financial Risks In A Rebounding Market
description
A rebounding economy and construction market can be financially hazardous because it presents increased cash needs to a cash poor marketplace. How do you grow your business in the improving conditions without committing financial suicide? This presentation answers this question by analyzing your company’s credit risk strategies and credit procedures. How you prepare for the risk of non-paying accounts and then respond to such accounts is the key to a healthy bottom line. The presentation will highlight best practices in the industry and case studies, and answer questions about the costs and benefits of various available legal options when you’re looking to get paid.
Transcript of Navigating Financial Risk In A Rebounding Economy
Navigating Financial RisksIn A Rebounding Market
“Sudden Rise In Home Demand Takes Builders By Surprise.”
http://zlien.us/12fN9Jv
“Homebuilding busiest since 2008.”
http://zlien.us/18XnIi9
“Construction is the bright spot for recovering economy”
http://zlien.us/18Xo3RR
Should You Be Scared Of An Improving Market?
Part 1: Why A Recovery Carries Risk
Part 2: The Metrics That Matter
Part 3: Be Proactive with Credit Risk
Part 4: Know Your Options
“No one liked the recession, but some contractors are going to hate the recovery, too.”
Thomas Schleifer, Ph.DDel E. Webb School of Construction
ENR Viewpoints: Beware The Recovery
“The construction market is going to be a financial struggle for most contractors because growth eats cash and many have been straining financially during the unprecedented downturn.”
Thomas Schleifer, Ph.DDel E. Webb School of Construction
ENR Viewpoints: Beware The Recovery
Financial Struggle To Meet Cash Demands With Small Cash Reserves
Long Recession Made Companies Cash Poor
Strong Economy Will Require Companies To Grow Into New Demand
Growth Eats Cash
0%
25%
50%
75%
100%
YEARS: 1 2 3 4 5
failure rates
Recovery Makes Things Worse
3xWORSE DURING
RECOVERYTHAN DOWNTURN
ENR Viewpoints: Beware The Recovery
debt ratios
0%
10%
20%
30%
40%
50%
E-Commerce Suppliers0%
25%
50%
75%
100%
YEARS: 1 2 3 4 5
failure rates
Debt Ratios: Aswatch Damondaran, NYU Sternhttp://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/dbtfund.htm
Failure Rates: Small Business Trends, Scott Shanehttp://smallbiztrends.com/2012/09/failure-rates-by-sector-the-real-numbers.html
Construction Industry is Already Risky
Part 1: Why A Recovery Carries Risk
Part 2: The Metrics That Matter
Part 3: Be Proactive with Credit Risk
Part 4: Know Your Options
Expect Your Customers To Have
Cash Flow Challenges
• Bad Debt• Aging Receivables• Days Sales Outstanding
Waiting For Retainage Can Add Up
Back Charges & Little Concessions
Add Up Too
Part 1: Why A Recovery Carries Risk
Part 2: The Metrics That Matter
Part 3: Be Proactive with Credit Risk
Part 4: Know Your Options
Don’t Gamble
Know who you expect to pay you.Do Your Homework
Rule #1
The Longer You Let An Account Sit, The Harder It Is To Collect.
Rule #2
It’s Flipping Expensive To Collect Old Debt, & Probably Not Worth It.
Understand Your Terms of Payment. Stick To Them.Set And Stick To Terms
Credit Risk Low- Protect Lien Rights
Credit Risk Medium- Protect Lien Rights- Get Personal Guaranty
Credit Risk High- Protect Lien Rights- Get Personal Guaranty- Joint Check Agreementor Letter of Credit
Smart CompaniesAlways SendPreliminary Notices
Legal Nuances:
• Pay When Paid• Pay If Paid• Retainage• Delay• Liquidated Damages• Indemnity Clauses• Lien Waivers• Change Directives
Part 1: Why A Recovery Carries Risk
Part 2: The Metrics That Matter
Part 3: Be Proactive with Credit Risk
Part 4: Know Your Options
Know The Collection Tools Available To You
Plan Your Collections & Legal Procedures Like A Construction Project
Secure your debt witha mechanics lien or bond claim.
1) Prioritize Your Debt In Event Of Bankruptcy
2) Claim Job site As Collateral
3) Skip Your Client And Sue Third Parties
Don’t Just Wait.
Follow Up. Prioritize Your Debt.
• 2 Emails Per Week For 6 Weeks
• Credit & Collection Policy Tips
• How Successful Credit Professionals Increase Revenue And Decrease Risk
Free!http://zlien.us/6week-creditpro
Questions?
