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We are currently experiencing the second act of the financial crisis that began in 2008.
If the indebtedness of American households has been the trigger for a chain reaction hardly curbed in 2009 and 2010, the basic problem, excessive debt in the West, has not been solved, far from it.
To counter the effects of the economic crisis, states have supported the ailing banks and funded recovery plans very expensive, without the means. They had to finance higher spending, increasing the debt significantly.
More debt increases, more the charge of the debt increases, thus depriving the state of its financial resources. The entire income tax is devoted to interest payments on debt, which is, incidentally, a great social injustice to the taxpayer ...
Only the return of strong growth would stop this vicious circle. However, it is conspicuously absent and it is likely that the rest in the coming years.
Indeed, by dint of debt, it is the states themselves that become insolvent, which can generate a sequence out of control systems for banks and all economic actors.
The current unrest around the "debt crisis" involves mainly short-term concerns (funding from financial markets, Craft Greece ... etc). What is being done to solve the basic problem which, if unresolved, leads us into the wall? Little or nothing!
Today as yesterday the debt of the Western countries is growing, depriving them more every day that passes the means to act and capacity to dispense with "new debt". The austerity policies that begin to be born will still help to slow the growth which will limit all the tax revenue and is likely to bring the social and political unrest.
The risk of failure of major states is real. It remains to know on what time scale? 6 months, 6 years? It is very difficult to predict. But the process of debt started in the late 70's probably likely to go to completion.
What are the consequences for businesses ?
The macroeconomic situation is very unfavorable to the establishment of a prosperous period for companies. The risks are many:
Decline in public investment, problems of banks, bankruptcy States, rising of unemployment, inflationary pressures on raw materials, risks to the euro ... are all factors that will weigh on the economy, therefore, on business. The level of business failures, already high, could rise again.
Late payments may increase under the weight of financial pressure, penalizing the need for working capital from those that are doing well.
Integrate sustainable principles of Credit Management in your company is the only parade to address these major risks and avoid being penalized by unpaid customers.
Debt crisis, which consequences for businesses ?
Effects of the debt crisis on the relationship between business and the management of receivable (credit management)
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