Quote:
Originally Posted by lendaddy
If conditions in your industry suddenly changed and you found yourself losing money, would you instantly shut it down or ride your LOC while trying to right the ship? Say it's a company that made you a profit/living for the previous 20 years.
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That is EXACTLY what happened...I rode the LOC AND cut payroll. We are lean mfg. We have about 16 inventory turns a year...roughly every three weeks. So I'm buying just in time, spitting it out the door, giving the customer 30 days to pay (which often drags to 60 plus for medium level customers, my largest are w/in terms) and having to pay my payroll in 7 days and purchases in 30. For many years we had a war chest and it was easy to weather the cash flow. But a down year made it tough to climb out. It took another 7 REALLY good months to chip away and get out of the LOC. Now staring down the barrel of this economy, I have to try and refill that war chest before the economy tanks in Cali.