In a Credit Crunch, Double-Check Your Clients

You know things are tight when you start seeing companies in your industry halting their debt payments. Companies can go from reliable to hiding in a matter of days because they suddenly find that they cannot get the amounts of credit they need to keep their business operating as it should. That means now is the time that some regular clients may suddenly become completely irregular. Once they're in a bind, there is little you can do, so the best way to avoid cash constipation is to look for some warning sings now:

• If a client is publicly-held, check its financial news. I did this with a client the other day (never pays to forget your own advice) and found that it had recently issued a press release about securing financing. A good thing, because then I looked at its financials and noticed that cash on hand was down to a few hundred thousand dollars at the end of the quarter. Yuck. I've just finished an assignment, but will probably "not get around" to sending another query until I see things improve.


• This is a time when you should pay close attention to any change in payments. Do not rationalize them away by saying that it's an unusual circumstance. So is the credit crunch. Tha'ts not to say a company would have an inadvertant mix-up, but don't make the assumption.


• Don't wait for problems to happen; make your exit plans now. In other words, if there are some clients that look questionable, immediately market to find potential replacement clients. That doesn't mean that you need to dump an existing client, but you want to be able to balance your work load and shift into a different set of clients if necessary. You also get the benefit of broadening your client base, being in greater demand, and maybe even making more money.