Credit isn't a right- you've got to earn it!
There was a story in the Mail On Sunday at the weekend about a ceramics maker who was complaining about being asked to pay up front for his energy supply because he was perceived as a high risk. The director complaining about this situation said that despite the fact he and others had rescued a hundred odd year old business from the administrators earlier this year, the energy company seemed to view him as a new business.
Well, the facts are that it is a new business!!- the hundred year old business effectively died after a meeting of Creditors was held in March 2009 under section 23 of the Insolvency Act 1986.
What the Mail On Sunday didn’t report was that the two directors leading the resurrected organisation were on the board of the failed loss making business, so it might have been a pre-pack administration jobbie we’re talking about here.
Now, I’m sure the director in the story is working his socks off to keep his employees in their jobs and to build a business again. However, I hope that a company in this situation factors into its new business plans additional finance to compensate for the poor credit status it will undoubtedly endure for some time to come.This type of re-born company has to accept that trade credit isn’t a right- a good credit reputation has to be earned.