Navigating Financial Risk In A Rebounding Economy

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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.

Published in: Business, Economy & Finance
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Navigating Financial Risk In A Rebounding Economy

  1. Navigating Financial RisksIn A Rebounding Market
  2. “Sudden Rise In HomeDemand Takes Builders BySurprise.”http://zlien.us/12fN9Jv
  3. “Homebuilding busiestsince 2008.”http://zlien.us/18XnIi9
  4. “Construction is the brightspot for recoveringeconomy” http://zlien.us/18Xo3RR
  5. Should You BeScared Of AnImproving Market?
  6. Part 1: Why A Recovery Carries RiskPart 2: The Metrics That MatterPart 3: Be Proactive with Credit RiskPart 4: Know Your Options
  7. “No one liked the recession,but some contractors are goingto hate the recovery, too.”Thomas Schleifer, Ph.DDel E. Webb School of ConstructionENRViewpoints: Beware The Recovery
  8. “The construction market isgoing to be a financial strugglefor most contractors becausegrowth eats cash and manyhave been straining financiallyduring the unprecedenteddownturn.”Thomas Schleifer, Ph.DDel E. Webb School of ConstructionENRViewpoints: Beware The Recovery
  9. Financial Struggle ToMeet Cash DemandsWith Small CashReservesLong Recession MadeCompanies Cash PoorStrong Economy WillRequire CompaniesTo Grow Into NewDemandGrowth Eats Cash
  10. 0%25%50%75%100%YEARS: 1 2 3 4 5failure ratesRecovery Makes Things Worse3xWORSE DURINGRECOVERYTHAN DOWNTURNENRViewpoints: Beware The Recovery
  11. debt ratios0%10%20%30%40%50%E-Commerce Suppliers0%25%50%75%100%YEARS: 1 2 3 4 5failure ratesDebt Ratios: Aswatch Damondaran, NYU Sternhttp://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/dbtfund.htmFailure Rates: Small Business Trends, Scott Shanehttp://smallbiztrends.com/2012/09/failure-rates-by-sector-the-real-numbers.htmlConstruction Industryis Already Risky
  12. Part 1: Why A Recovery Carries RiskPart 2: The Metrics That MatterPart 3: Be Proactive with Credit RiskPart 4: Know Your Options
  13. Expect YourCustomers To HaveCash Flow Challenges• Bad Debt• Aging Receivables• Days Sales Outstanding
  14. Waiting For Retainage Can Add Up
  15. Back Charges &Little ConcessionsAdd Up Too
  16. Part 1: Why A Recovery Carries RiskPart 2: The Metrics That MatterPart 3: Be Proactive with Credit RiskPart 4: Know Your Options
  17. Don’t Gamble
  18. Know who you expect to pay you.Do Your Homework
  19. Rule #1The Longer YouLet An AccountSit, The HarderIt Is To Collect.
  20. Rule #2It’s FlippingExpensive ToCollect Old Debt,& Probably NotWorth It.
  21. Understand Your Terms of Payment. Stick To Them.Set And Stick To Terms
  22. Credit Risk Low- Protect Lien RightsCredit Risk Medium- Protect Lien Rights- Get Personal GuarantyCredit Risk High- Protect Lien Rights- Get Personal Guaranty- Joint Check Agreementor Letter of Credit
  23. http://zlien.us/credit-policies
  24. Smart CompaniesAlways SendPreliminary Notices
  25. Legal Nuances:• Pay When Paid• Pay If Paid• Retainage• Delay• Liquidated Damages• Indemnity Clauses• Lien Waivers• Change Directives
  26. Part 1: Why A Recovery Carries RiskPart 2: The Metrics That MatterPart 3: Be Proactive with Credit RiskPart 4: Know Your Options
  27. Know The CollectionTools Available To You
  28. Plan Your Collections &Legal Procedures Like AConstruction Project
  29. Secure your debt witha mechanics lien orbond claim.
  30. 1) Prioritize Your Debt In Event Of Bankruptcy2) Claim Job site As Collateral3) Skip Your Client And Sue Third Parties
  31. Don’t Just Wait.Follow Up.Prioritize Your Debt.
  32. • 2 Emails Per WeekFor 6 Weeks• Credit & CollectionPolicy Tips• How SuccessfulCredit ProfessionalsIncrease RevenueAnd Decrease RiskFree!http://zlien.us/6week-creditpro
  33. Questions?

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