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ReadersSpeak

the next few months. "Another way to protect a business'
financial health while minimizing risk is right-sizing the
credit lines of current customers," he added. "It's worth it
to take the time to accurately determine how much credit
randon Spear, president of MSTS, sent in the customers require to support their purchasing needs. Of-
following commentary on how businesses can tentimes, a customer may qualify for a credit line that's
properly vet partners when seeking working much higher than their actual purchasing activity, and
B capital. right-sizing reduces the risk of bad debt without inhibit-
ing customers.
"Businesses seeking working capital may turn to a variety
of sources and partners for help," Spear wrote. "But when "For businesses unable to extend credit to customers with
it comes to extending credit to B2B buyers, there's always these additional considerations, it's best to turn to a part-
been a degree of risk that is now exasperated by the global ner that takes on the credit extensions — as well as the
health crisis and the resulting economic uncertainty. And risk. They must also consider the wide array of alternative
when finances are strained and working capital is tight, funding options, such as asset based lending. Before sign-
it may be difficult to fully support customer requests for ing any deals, it's imperative to fully understand the terms
trade credit. of the agreement and look historically at the partner's
work with similar industries and clients to ensure the
"However, with a strategic approach to underwriting and partnership will help the business conquer its short-term
credit line management, B2B sellers can preserve their challenges and provide long-term support and efficiency."
business's financial health and maximize working capital. Your views could be here
Like most industries, customer underwriting is also im-
pacted firsthand by the challenges brought about by the We wish to thank Brandon Spear for sharing his insights
COVID-19 pandemic. on this topic. For additional commentary, visit www.
msts.com/resource-center/blog. If you'd like to sound
Spear noted that a strategic approach involves using cur- off on this or another relevant topic, please email
rent and forward-looking data from a buyer's industry greensheet@greensheet.com.
and customer base to determine the financial outlook over

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