Credit where it's due: firm revamped payment terms to cope with squeeze

WHEN Seamus Redmond made sweeping changes to his credit terms, the driver was sheer necessity. With €200,000 in bad debts courtesy of the construction collapse, the engineer knew his seven-man flooring company, Renobuild, couldn't withstand many more defaulting customers even though new business is flourishing.

"I've never seen anything to stop as sudden, abrupt, and severe as cash flow," he recalls with a near-shudder.

"We were being paid in 30 days, then it was turning into 90, then people stopped answering the phone. I was putting my own savings into the company to keep the place going."

Inspired by the practices of one of his own suppliers, Mr Redmond changed his standard credit terms from 30 days to a 50pc payment upfront plus a credit card with room to take the rest, or a letter of guarantee from a bank.

Credit insurance, something Mr Redmond admits he hadn't known about before the downturn, was also explored; but he found that door had already closed, leaving Renobuild to plough on alone.

Cutting off future bad debts at the source was only half the battle -- Mr Redmond still faced the challenge of his own creditors who'd gone unpaid when Renobuild's cash-flow dried up.

Believing himself to be "financially a bit of an idiot", he employed local Gorey firm Horizon Financial to run the rule over his company's books.


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