Corporate Collections Suffer as Economy Worsens

by Erin McCune on April 1, 2008

in Economic Outlook, Receivables, Research Round Up

Today the National Association of Credit Management released its monthly Credit Manager's Index. For the first time since the index was calculated in February 2002 the combined manufacturing and services index has fallen below 50, indicating an economic contraction.

[Excerpt from CFO.com] accounts receivable departments have been feeling a major crunch. Credit managers told The National Association of Credit Management (NACM), which conducts the monthly survey, that they've had to send out more late-notice letters to clients, while others report customers asking for more time to pay. "Collecting receivables is becoming more and more difficult," a furniture vendor said. Added a grocer supplier, "Customers just don't want to pay current bills."

Credit Managers Index for the last 12 Months:

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As companies struggle to collect cash, pressure to maintain working capital increases just as recent market gyrations and more caution among lenders restricts the availability of credit.

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