When cash flow is a problem, a business must consider applying for credit terms with its suppliers and shipping companies. In these uncertain financial times, credit terms can be made available to businesses that can demonstrate a satisfactory financial track record. The term “credit” is used in commercial trade to mean “an agreement that payments can be delayed after merchandise has been delivered”. This credit is not normally offered if the company is deemed unreliable or troubled.
The Mediterranean Shipping Company MSCA has four passenger Cruise Liners and is the world’s second biggest shipping organisation dealing with containerized shipments. Recently, the company acquired a comprehensive business solution to contain any future debt management. Traditionally, Shipping companies have not allowed credit terms to their customers, dealing in one shipment/one payment. However, many changes have occurred in the Shipping Industry and some customers are now occasionally offered credit terms. Some organisations which offer financial credit to their clients employ a Credit Manager whose job it is to oversee the debts and make sure they’re paid in a timely manner.
If a “business line of credit” is offered to finance temporary working capital or loan, it is usually offered for one year. A line of credit is often secured by a lien on the assets of the company in need, but only offered if there is a proven track record of good earnings in the past. It’s worth noting however, that credit insurance can protect a company against bad debts. It will also help sustain a business, increase profitability and improve cash flow.