Posted: Thursday, 27 October 2011 @ 13:35
Most small businesses learn early on that there is a difference between being busy producing and selling goods or services and actually getting paid for them.
The temptation to extend credit terms to customers so they can buy your goods might seem like a good idea at first but, in reality, you are lending them money, which presumably they have been unable to obtain from their bank or other sources. Do you really have the funds to risk on customers who may never be able to afford to pay?
It’s a shame this business lesson, that many businesses face early on in their existence, hasn’t been learned by European politicians.
The very idea of lending money to your customers so they can buy your goods makes bad economic sense as well as being a bad business practice. Yet, this is exactly what the Eurozone countries have come up with (yet again). Even worse, they know that the countries, like Greece, can’t afford to pay them back, not unless we begin to see some real and sustained growth across Europe.
But at least this latest deal should stabilise things for a while. I suspect though that the next Euro crisis won’t be too far in the future.
Blog by Gary Cousins
Gary has been providing legal advice to shareholders, directors and business owners for over 25 years. Specialising in dispute resolution Gary is based in Birmingham with clients throughout the UK and overseas. View profile
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