When to Be Credit Wary

BY STANLEY ZAROWIN

When a company asks for credit, be cautious if it

Has stopped obtaining audited financial statements and now prepares only reviews or unaudited or compiled statements.

Presents financial statements that show profits, but doesnt present a cash-flow statement.

Shows large amounts of due to or due from its owners in its business records. Thats a sign the owners are using the business as a personal bank or the business is borrowing from the owners because it cant get credit anywhere else.

Stanley Zarowin

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