Sellers should be proactive in taking steps to protect
themselves from a distressed buyer's non-payment.
In the current economic downturn, sellers are dealing with many
formerly good customers whose financial health is deteriorating. To
protect their interests, sellers should assess their rights under
applicable contracts and law and develop a strategy to minimize
their exposure.
Step 1 – Assess the Parties' Contractual
Rights
Sellers with long-term obligations to distressed buyers first
should assess their contractual rights to cancel or restructure
those contracts, as well as the terms of any credit insurance
safeguarding the seller's accounts receivable. Even sellers
without long-term contacts should review their contractual
obligations, particularly if there is a risk that the buyer will
file for bankruptcy.
