Wednesday, April 29, 2009

Why not replace trade credit with credit cards

A tough story coming out of the UK. see snippet below. It's worth the click. He makes good sense when he says the risk of exposure to trade debt is a big problem. Maybe in the UK, the government could get involved. But why not just pay the credit card company the 2 or 3% for credit insurance. I would think it's money well spent.

Plus you get to give your customers the option of frequent flyer miles. Costco offers an Amex card with a 3% rebate. Why not the same thing for a printernet company? An OEM. OPM or VAR could do a deal with a credit card company. Of course that means forgoing financing profits.

But given how the financing business worked out for GM, I say if you want to make money like a bank, then be a bank or spin off a bank. Don't make believe you make cars, or boxes, but really be a bank in disguise. The numbers look good, but the risk is very high.
Kent finisher to buy own assets in 'last resort' deal
"'It isn't something that I took lightly, it was a last resort and something that I tried to avoid. But if I didn't do this 20 families would be left without an income. If the Inland Revenue had given me more time I could have traded out.'

And Crook believes that situations like his could be avoided if the government made it a legal requirement to pay debts inside 30 days.

He added: 'That is the biggest thing the government can do to ease stress on a lot of companies. When a company doesn't pay it hurts, you rely on that cash flow."

No comments:

Post a Comment