- Is the reason for collection problems related to inferior products or services with the resulting customer dissatisfaction causing slow payment?
- Does the business have quality clients, or does it attract clients that are going to be a hassle to work with?
- Does the business have ineffective employees who need to be trained or terminated due to their inability to collect money the business is owed?
- Does the business have inferior systems?
- Is there a dispute that could lead to litigation or a formal claim since it is common for payment to be withheld leading up to such an action?
Having good credit and collection policies are important for any business, but since I am a business broker, I always tend to look at things in terms of how they may impact the marketability and value of a business. When a business has significantly aged accounts receivables and/or significant bad debt it not only negatively impacts a business buyer's perception of financial performance, it also raises other important concerns about the quality of your business which could impact perceptions of value and may inhibit marketability. A few examples of these concerns include:
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