![]() If you enter the game in a business-as-usual fashion, you are already at a disadvantage. When businesses are in trouble, you are competing against other, often more powerful creditors to collect. A recent series of surveys by the Edmonton Chamber of Commerce show that the majority of small and medium businesses don’t have enough cash reserves to get beyond two months of expenses-and nearly 60% now say they may go out of business permanently. ![]() Brzezinski recently told the CBC.ĭespite the massive investment, none of the government measures have done much (if anything) to help the biggest problem facing busineesses: future cash flow. Many, many businesses that will not survive,” Mr. “We’re going to see businesses that will not survive. Municipal business taxes and mortgage deferrals are not being forgiven and will need to be repaid-in some cases with additional interest accrued.Īccording to Lou Brzezinski, a Toronto-based lawyer who specializes in business reorganization, insolvency, liquidation and bankruptcy, a major spike in bankruptcies is just a few months away. Government support packages like the Canada Emergency Wage Subsidy, Canada Emergency Commercial Rent Assistance and Canada Emergency Business Account are temporary and can’t be extended forever. Emergency government subsidies, business tax deferral and mortgage relief have created a facade that’s guaranteed to crumble-and soon. And as they do, the marathon turns into a sprint.īankruptcies are still not spiking, but that doesn’t mean things are well and fine. And as bad as things may seem, the impacts of the COVID-19 crisis are only beginning to manifest for many businesses. If the debtor business was aware of the account and had not yet made good on it, either the company was in trouble or there was intent to withhold payment altogether. Ninety days was long enough to indicate there was a real problem somewhere, while not so soon as to look overly aggressive. ![]() In my industry we live by the numbers, and statistically as debt passed the 90-day mark, it became dramatically less likely for the credit-granting business to collect. You didn’t want to put undue pressure on those hard-won accounts.Īnd there was logic to the timing. For businesses in need of cash, 90 days AFTER the due date had come and gone was a bit of a marathon. Meaning if an overdue account went more than 90 days past due, it was time to send it in to professional collectors. For ages, 90 was the benchmark in collections.
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