February 28, 2012

Too Big To Fail Is Not In My Dictionary

By Paul Bieber

Trainor sure did surprise me, but then again, I live in New Hampshire and have my head buried in a snowbank most of the year.  Some of their vendors knew, their gut feel alarms were ringing, but some will fall into the category of “Sure I’ll sell them…they are one of the biggest, so I am sure they are good.”

The last four years have shown all business people that anyone can go bankrupt.  What do you, as a glass shop or a supplier to glass shops do?

Investigate each new customer, even if you have heard about them for years.  Ask for credit and bank information.  The credit references must be from trade sources.  If a building owner, who wants a new storefront, gives you a hardware store and the phone company, look out.  You should get references from other service vendors, similar to yourself.  If the owner also runs the business, get his/her main merchandise vendors.

Call the bank, asking what their average balance is, and if they have a line of credit, how much is available, and if they have any NSF checks.  You may need an authorization from the customer to give to the bank.  A simple note from the customer to you, will suffice if you don’t have this built in to your credit application.

When a company goes bankrupt, the creditor’s committee may ‘claw back’ payments made to you in the previous 90 days.  Complain all you want, you are wasting your time.  If you feel someone is on the verge of bankruptcy don’t accept new work.  Yes, they may survive and remember you as someone who didn’t work with them.  Or they may sink, and take you with them.  Do you want to lose one customer or your business?  Easy enough choice.

Listen to the rumors in the trade.  Listen to your competitors.  Ask delivery drivers where they are now collecting COD.  (This is one of the best sources of info!)

I am the guy who is an eternal optimist.  I feel the economy is now turning around and everything will come up roses.  But, (yes, there is always a ‘but’), we are not out of the woods yet.  Trainor has proved this.  I am not knocking them.  They ran a great business for many years and were very well respected members of our glass community.  But things happen.  Be careful in giving credit; follow up when money is due; stop work and delivery of new materials when promises are not kept and, most of all, don’t ignore the little warning bells you keep hearing.