Asset-based lending: how you can help your customers improve their cash flow.(Selected Topic)

If you're a credit manager, you don't need to read the newspaper to get the latest dreary news about the economy. Chances are, you see it up close and personal every day.

As we enter the third year of this prolonged economic slowdown, it's apparent that few industries have been spared the pain. Non-performing loans, one leading indicator of financially strapped businesses, were up nearly 17 percent late last year to almost $70 billion, the highest level since 1992 following the savings and loan crisis. And delinquencies continue to rise, with bankruptcies expected to reach an all-time high this year.

Statistics like these reinforce the very real risks of doing business on open account terms, especially during difficult economic times. After all, when customers go out of business, unsecured creditors are the last to get paid. While it's the least expensive form of financing for your customers, offering open account terms is one of the biggest risks any company takes--making the credit manager's job that much more critical today.

Squeezed by the Credit Crunch

As the credit manager, you're in a unique position to spot and analyze cash flow problems at companies with whom you do business. Perhaps the problems stem from a slowdown in your customers' receivables. Or maybe your customers are dealing with the effects of the "credit crunch" being felt by many businesses as banks tighten credit standards on both new and existing customers.

The good news is that there is a financing alternative designed especially to help companies squeezed by the credit crunch. By referring your customers to a company that specializes in asset-based lending, you can help them improve their cash flow and, hence, their ability to make timely payments to your company.

How Asset-Based Lending Works