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Addressing Cash Flow Problems
Occasionally, a debtor will send all of its creditors a form letter stating that they have cash flow problems. One of the more typically reason given is that one of the debtor’s customers filed for bankruptcy protection. The first step involves explaining that your company also has debts to pay, and that the debtor cannot simply assume your company can or will carry this burden. The debtor is trying to turn its problem into the creditor’s problem. Start by suggesting the debtor look to more “regular” sources of working capital, including banks, factors, and finance companies.
Submitted by Michael C. Dennis