More sinkie companies having cashflow problems?

[Rogue Trader]

More companies taking longer to repay debt
Some are becoming selective about which debts to pay on time, and which ones they are allowing to extend out. -AsiaOne

Mon, May 07, 2012
AsiaOne

More companies are taking a longer period of time to repay their bills during the first three months of this year.

A report by business information group DP Information Group said 23 per cent in monies owed across all industries were still unpaid 90 days after the debt was due.

This is an increase of 5 per cent from the last quarter of 2011.

According to the report, the number of days a company takes to repay its creditor once a debt is due remained steady at 41 days for the first quarter of this year, compared to 40 days in the last quarter of 2011.

Companies are also choosing to hold back some payments to preserve cash.

Ms Ong Siew Kim, Senior General Manager of DP Information Group, said companies are becoming selective about which debts to pay on time, and which ones they are allowing to extend out.

"If a creditor is not putting pressure on the debtor to settle an account, then many companies just choose to let the debt ride for a couple of months.

"This means tardy payers are funding their businesses by holding back on money owed to less demanding creditors," she said.

Ms Ong also encouraged small and medium enterprises (SMEs) to be diligent and persistent in chasing up their accounts receivables.

She said changes in payment behaviour, such as suddenly becoming slow to pay debts, are often a sign that a company is experiencing financial difficulties.


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[Scrooball (clone)]

These are the smart companies. This is especially if you are a huge industry player and your suppliers don't dare to cut you off.

 

[Cestbon]

These are the smart companies. This is especially if you are a huge industry player and your suppliers don't dare to cut you off.

If they big smart company. Just declare bankrupt after pocket the money as bonus/benefit.
Then start with new company.

 

[Zombie]

These are the smart companies.

alternatively it MAY mean that the tidal wave is expecting to come...

 

[Scrooball (clone)]

It is common practice to delay payment to suppliers. Let's say typically you are given 90 days, you settle 60 days in addition to that. Nowadays economy not so good, suppliers have to learn to shut up and play nice.

 

[Rogue Trader]

It is common practice to delay payment to suppliers. Let's say typically you are given 90 days, you settle 60 days in addition to that. Nowadays economy not so good, suppliers have to learn to shut up and play nice.

LOL! Ah neh companies like to play this smelly trick... Do work first then sign contract later.

But this trend is worrying. If it cascades downwards everybody will kenna fuck backside...

 

[Scrooball (clone)]

LOL! Ah neh companies like to play this smelly trick... Do work first then sign contract later.

But this trend is worrying. If it cascades downwards everybody will kenna fuck backside...

Not just ah neh companies. Most local companies have this very bad practice. Especially those mid-sized companies in manufacturing....could be metal stamping, plastic moulding etc.

 

[Rogue Trader]

Not just ah neh companies. Most local companies have this very bad practice. Especially those mid-sized companies in manufacturing....could be metal stamping, plastic moulding etc.

Hahaha.. Yah I can imagine the small SMEs...

I heard the construction industry is also very cash strapped. Need cash from new projects to pay off the old ones. Once construction in sinkieland slows down, everybody will die. :(

 

[nato33]

LOL! Ah neh companies like to play this smelly trick... Do work first then sign contract later.

But this trend is worrying. If it cascades downwards everybody will kenna fuck backside...

Problem is not localized but international practice for small companies with limited cash flow

I worked for a smallish US company previously and they resorted to same trick. Every month, delay payment to some suppliers. When supplier escalate loud enough, deploy same tactics to next supplier. Very tough for me to manage as my HQ say this is one way of improving their cash flow. I quit after 9 months as can't tahan suppliers chasing for payment and yet US HQ expect suppliers to provide top notch services.

 

[Scrooball (clone)]

Sometimes, if you are lucky, your suppliers goes bankrupt before you pay up.

 

[johnny333]

If they big smart company. Just declare bankrupt after pocket the money as bonus/benefit.
Then start with new company.

That is what I think Far East is doing. They open these subsidiary companies & build the condos under these companies. After the condos are built, the people who paid for these sub-standard condos start to find problems & try to get them fixed. These subsidiary companies will simply declare bankruptcy. Voila, Far East gets away with the $$$ without any of the liabilities.

 

[Rogue Trader]

Problem is not localized but international practice for small companies with limited cash flow

I worked for a smallish US company previously and they resorted to same trick. Every month, delay payment to some suppliers. When supplier escalate loud enough, deploy same tactics to next supplier. Very tough for me to manage as my HQ say this is one way of improving their cash flow. I quit after 9 months as can't tahan suppliers chasing for payment and yet US HQ expect suppliers to provide top notch services.

I had a taste of this a long time ago working as a temp AP assistant in a small MNC. Really hated it. Just had to pretend you are a dumbfuck low-ranking processor and say your FC/FM/purchasing/receipting departing is still approving. Even if they shout and scream at you, it's no use.

I learnt then that cash is lifeblood of the company. Even if the company is profitable on paper but insolvent, it will still dou diam.

 

[Fishypie]

Sometimes, if you are lucky, your suppliers goes bankrupt before you pay up.

How very true..

 

[nato33]

Sometimes, if you are lucky, your suppliers goes bankrupt before you pay up.

During recession, small businessmen who have a bit of savings rather stop their business for a while. That way, they conserve their cash rather than do the job and cannot collect money. My cousin, who is in construction business in KL, did this and lived to fight another day. He spent most of 2008 playing Golf

 

[Fishypie]

During recession, small businessmen who have a bit of savings rather stop their business for a while. That way, they conserve their cash rather than do the job and cannot collect money. My cousin, who is in construction business in KL, did this and lived to fight another day. He spent most of 2008 playing Golf

Me thinking aLong this Line of Late..