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OPERATIONS

Swapping Statements

One company offers its own credit statistics to prospective clients before asking for any of theirs.
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NOVEMBER 1988

It's never easy to figure out which customers will pay your bills and which ones won't. However, Rick Johnson, CEO of BurJon Steel Service Center Inc., in Springboro, Ohio, has a strategy that helps. Whenever possible, he judges the creditworthiness of major prospective customers by examining their financial statements. How does he get to see them? By forking over BurJon's financials first.

"Usually, a company doesn't like to share numbers with suppliers," Johnson says. "Showing them ours makes it easier for them to show us theirs. They see we have loans to pay just like they do.'

Johnson argues that the rewards far outweigh the risks of sharing statements. "Our numbers aren't going to tell our competition how to do anything. The risk is small compared with the benefit of finding out if the company we want to do business with is on solid ground." And, he says, financials are much more current than the traditional credit check.




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