Thursday, October 2, 2008

No (real) Credit Crunch?

Companies looking to close deals and get paid upfront from cash-strapped customers should turn to financing and credit options. Despite the Wall Street meltdown, and the terrible way Washington is handling it all there is plenty of money still out there in banking and credit system.

On September 26, Americans woke up to the news that Washington Mutual, the nation’s largest savings and loan, had failed under the weight of $31 billion in bad debt. That dwarfs my $4,000 in past due invoices. It was the latest, of a string of banking disasters to plague Wall Street and the entire global financial system.

The impact of these Banks and Wall Street problems on corporations and consumers is a tightening of credit, the lifeblood of the global economy. If there is no cash in the system, banks and lenders can’t extend credit to purchase goods and services. It’s the very reason why the government is contemplating a $700 billion bailout plan.

Sitting back looking at my check book wondering if I was to wrote a check out to a company you mean they would not take it. You mean that only if I borrow funds to support my company I’m ligament enterprise. You mean that if my company takes in more than I spend that is bad?

Credit, however, isn’t hitting business as hard as it is homeowners and big industrialists. In a recent survey it was found that nearly 80 percent of solution providers are having about the same or better access to credit than they did in 2007 and that credit is easier to come by today than it was three years ago.

Even with the walls of the financial world tumbling down, one in three active companies say that the availability of credit will improve in the coming year.

"So far there is no evidence of a lack of capital," says IDC's Joe Pucciarelli, program director for the market research firm's Technology Financing & Management Strategies practice. In fact, Pucciarelli is among a group of analysts who predict that the financial services crisis could spur technology spending in other sectors.

All of this is really very good news for all people, companies, and resellers, who don’t necessarily borrow money to fulfill deals but do help their customers gain access to loans and lines of credit so they can make product purchases. Oftentimes, the availability of credit is dependent upon the customer’s credit rating and banking relationships.

You might have checked your personal credit report numbers but have you checked on your companies numbers lately?

"There are companies that have maintained excellent banking relationships," says Pucciarelli. "They have reservoirs of credit if they need it. There are small companies that have done nothing. It's not a function of size. It's a function of the attention the companies have paid during the good times to ensure they have adequate contingent resources – those resellers who were prescient enough to recognize the benefit of it."

Larson note: So where do you sit? Do you know your banker’s name, their first name, how many kids they have? Go on, splurge and buy your local community bank’s officers a cup of coffee and get to know them now, rather than later. Now when you don’t need them rather, than later when you do need them.

Note to self, I’ll have to put down Larson’s Money and Financial Plan for no needs banking some day.

Howard Larson
Larson & Associates
Telesales & Target Marketing Professionals for new account acquisition
Making good businesses great and great businesses even better

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