Welcome Guest | |
Submit Your Sourcing Requirement
Advanced Search Filtersdown arrow
left border  
left border  
Last Updated:[17-08-2009 07:28:45 EDT] Zoom in Zoom out Back to Tradenews

Jamaican Businesses Pulled Up by Rising Bad Debts

tradenews Jamaica’s poor payment culture is causing severe problems to all businesses, reported Jamaica Observer newspaper. The daily itself has fallen to the crisis with about 40 percent of its revenues overdue, and the majority of the Observer’s revenues come from the credit to advertisement agencies.

Many companies have either adjusted credit terms to facilitate delinquent clients, or written off large sums in unpaid debts. Most receivables are either delayed or never paid on the pretext of economic downturn and due to chain reaction effect.

The financial statements of utility companies like LIME and Jamaica Public Service Company (JPS) stand witness to the current receivable status of businesses in Jamaica. For the financial year ending March 31, 2009, 15 per cent of LIME's $3.5bn in outstanding accounts was impaired or written off as uncollectible, six percentage points higher than impairments reported in 2008. On the other hand, the receivables written off during the energy provider's financial year ending December 31, 2008 was $19.3mn, more than double the $7.6mn written off the previous year.

Lutec, the office technology solutions provider had a shortfall of about 30 to 40 percent in receivables said the company’s CEO Duane Lue-Fong. He admitted that the company was making 10 more calls for a cheque that took three calls, and had to spend extra on debt collectors to recover monies owed.

Small businesses too have got caught in the bad payment vortex as delayed receivables have created a domino effect on all businesses. A small trader stated he had to receive about $200,000, and was not in a position to buy goods to keep his business alive.

One of the major casualties of the present receivable crisis is the closure of the processing facilities, last month, of Longville Park Farms, one of the island's largest producers of freshwater fish. Longville Park owner Donnie Bunting said he was a victim of the poor payment culture associated with Jamaican businesses rather than any financial pressure on clients due to the recession.

Nevertheless, few companies seemed to be weathering this bad debt crisis through some effective measures such as, the stringent screening of new clients. According to GraceKennedy, a banking and financial company, diligent care in dealing with new clients is paying off good dividends, and bad debt runs at about 0.5 per cent of sales is only around 10 per cent of the company's receivables overdue.

By Jose Roy

What do you feel about this Trade News?
Feel free to write COMMENTS
*Your Email Address:
*Your Message:
Please refresh the screen if you
can't read the following text
*Enter above security code : 

Delicious.com Digg.com Facebook.com Google.com/bookmarks Yahoo! Bookmarks reddit.com