Corporate Bankruptcies Are Creeping Up as Pressures in the Economy Grow

[su_quote cite=”Jeanne Whalen, the Washington Post”]Corporate bankruptcies in the U.S. are edging back up after a two-year lull as pressures in the economy grow. The increase is most visible among large companies, where there were 236 bankruptcy filings in the first four months of 2023—more than double 2022 levels, according to S&P Global Market Intelligence. Among all companies, the increase in bankruptcies is more muted, with filings remaining below pre-pandemic levels and historic norms, notes Moody’s Analytics chief economist Mark Zandi. Yet filings are creeping up as interest rates rise, pandemic-era government support dries up and sales growth slows amid a cooling economy. There were about 16,200 bankruptcy filings among all types of companies in U.S. District Courts in the first quarter, up from 12,200 a year earlier but well below the 21,000 or more a quarter in the pre-pandemic period.[/su_quote]

Read below for 5 tips to protect your staffing agency from the risk of client non-payment.

1. Do your due diligence prior to bringing on a new client. Help avoid potential risk by using a source such as Dun & Bradstreet to assist with checking the credit of the company you plan to provide staffing for.
2. When onboarding a new client, establish a relationship with their Accounts Payables department. Have a discussion to determine what details they need on the invoice so they can submit on-time payments. Discuss the contract terms and their internal workflow to ensure a smooth payment process.
3. Designate one person in your office to manage the aging. Their responsibilities would include running a weekly aging report, clearing up invoicing errors and short pays, as well as consistent calls to clients to manage late payments.
4. Speaking of late payments, watch payment trends! Has your client typically paid in 30 days but now trending at 40 or 45 days? If you notice days outstanding slipping with a client, it’s important to promptly get on the phone to understand what’s going on and come up with a plan for getting payments back on track.
5. If you are using a funding company to provide you with more consistent cash flow and growth, they will typically assist with these functions. Take advantage of this resource to help you manage this part of your business.