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The Honolulu Advertiser

Posted on: Monday, July 8, 2002

Managing debt can help prevent crisis

By Dr. Drake Beil
President, Solutions Inc.

Could you misplace a few billion dollars if you tried? With the stunning accounting and leadership failures at Enron, WorldCom and others, maybe we should look at how to deal with debt successfully. Here are three tips that might help.

First, pay attention to receivables. My friend Randy in accounting told me, "Every bad debt starts out as a slow pay," so do the best you can to focus your efforts on collections. Automatically add interest due to each month's statement, just to make it clear you are keeping score.You can turn receivables into assets immediately by selling them for cash, but be prepared to pay a few percent for the luxury of instant payment.

Second, consider outsourcing everything else that's not core business. You can have your payroll done outside by a responsible third-party firm. You can have your employment handled by a professional employment organization. They assume all of the liability and risk of the personnel function.

Third, borrow money when you don't need it, because that's when banks want to lend it to you and you can shop around. Banks have some flexibility in how they treat you, especially if they sniff multiple accounts. What if you added your personal lines, credit cards, investments and insurance? Good clients are always a valuable commodity, and when you manage your debt wisely, everybody wants you.

Reach Dr. Drake Beil at drake@60secondsonbusiness.