Clients Beware! The Federal Reserve Is Warning of High-Debt Risk Making Now the Time to Gear Up and Protect Your Receivables
There are growing signs of financial instability in the U.S. economy, including high debt levels, and our clients should be mindful of the risks and work with competent counsel to prepare for the potential downturn in the economy and increased levels of bad debt.
In its recent report on financial stability, the Federal Reserve warned that the U.S. economic system is vulnerable to elevated asset prices, historically high debt owed by businesses, and the increasing issuance of risky debt. In its report, the Federal Reserve also expressed concern that the commercial real estate market is at risk because prices of property are increasing at a faster rate than rents. The Fed’s warnings are issued in the midst of rising interest rates that are beginning to negatively impact the economy, resulting in concerns in the financial markets and elsewhere that growth is slowing.
Keeping in mind these growing risks to the economy, KMK clients must more thoroughly and carefully evaluate the credit risks posed by their customers. Further, it is critical to stay on top of the age of receivables and tighten standards to flag potential bad debt early and take aggressive action to ensure the maximum level of recovery on debt not paid within terms.
As always, KMK stands ready to assist our clients in minimizing the risk that a significant economic downturn could impact their ability to recover their receivables. When facing these risks, it is critical to move early, quickly, and aggressively to ensure that you have the best chance to recover the balances you are owed. You can rely on KMK’s long history of successful receivable recovery to enhance your bottom line in this period of growing economic uncertainty.
Kohner, Mann & Kailas, S.C., (KMK) is a leading business transactions, commercial finance and litigation law firm that provides clients with cost-effective legal support for their business operations. Formed in 1937, KMK blends demonstrable business know-how with the legal issues that arise from doing business in the United States and elsewhere. KMK offers an experienced and sophisticated team able to adapt its services to the particular business issues of its clients. Based in Milwaukee, Wisconsin, KMK has a reputation for achieving results in local, national, and transnational business disputes and transactions. For more information, visit www.kmksc.com.