Can anyone suggest a strategy to take prior to the actual filing?
You can do a UCC filing which makes you a secured creditor, in that
you would come before the unsecured creditors. Its not a guarantee
but it moves you further up the line. I’ve never done it so check
with an expert re procedure and costs.
You can become a JBT or D&B member and get credit reports before you
grant credit. Still not a guarantee but you might avoid some risk.
What a lot of manufacturers are doing these days is taking checks.
Customer gives you post dated checks in whatever dating you both
agree on, break into monthly installments if you wish. Frankly I
don’t know the legal ramifications regarding how post dated checks
would be viewed by a trustee but certainly I’d bet most issuers of
post dated checks fear criminal consequences so they’re more inclined
to cover them, bankruptcy filing or not. I do this now on a good
percentage of my purchases. I like it because it frees me up from the
dreaded paperwork. I just keep a log of all post dateds so I know
when they’re coming up. Its not much different in practice from
automatic credit card payments. I remember my early days in
business…everything was terms, net10, 30 days, 30-60-90, January
dating etc etc. It was freekin nightmare to sit up nights twice a
month, bills and checkbooks and calculator spread all over the dining
room table trying to make some sense out of who gets paid this time
around. I didn’t go into jewelry to be an accountant so that was for
the birds. What I’m trying to get across here is that don’t
presuppose that your clients will be averse to post dateds, Despite
that they sound scary at first, they actually benefit both parties.
I think small makers are in a catch 22 situation. They can’t really
afford to grant credit yet if they don’t they may not make the sale.
I wonder if at some point the industry brings back jobbers. A jobber
was a distributor who made the purchase from the maker and then
resold at a small profit to retailers. This isolated makers from some
risk, resulted in bigger sales for the maker, but also resulted in
higher prices to the retailer but made his buying a little easier.
With the ongoing pressure on prices and the bankers’ mood it prob
won’t happen anytime soon. Still, it was a staple in the industry for
a long time and like most classics, may come back. Going back to the
dining room table…it was nice and convenient to write one check
that covered multiple individual product sources.