Litigation

Emergency Fund and Good Cash Management Essential to Financial Stability

By John Darer

An emergency fund is simply sound financial planning for both individuals and businesses. The old adage that you should have 3 months expenses salted away in an emergency liquid reserve fund  to cover unanticipated blips has been enlarged to 6 months or 1 year in today's economic environment.

Another important consideration, particularly in an environment where credit is tight, is that a high cash burn rate, coupled with insufficient reserves, can lead to payment delays to creditors which can seriously impair credit ratings and leave the business vulnerable. Businesses may need credit to maintain essential functions.

The Dun & Bradstreet PAYDEX is a unique dollar weighted indicator of payment performance based on up to 28 payment experiences as reported to Dun & Bradstreet by trade references. Ratings run from 0 (lowest) to 100 (highest). PAYDEX Ratings of 80 or above are considered a low risk of late payment while 0 to 49 is considered a high risk of late payment.

According to D&B Forge Consulting, LLC, a major agency in the structured settlement industry has a 3 month PAYDEX of 2 and a 12 month PAYDEX of 9 as of March 13, 2009. Such PAYDEX ratings indicate payments are running close to 150 days behind.

While a modicum of sympathy can be garnered due to the economy there are individuals and businesses who do not overextend themselves or over promise.

I hope I'm not the only one confused by the fact that the PAYDEX information on FORGE Consulting conflicts with its advertisement that it has "virtually unmatched financial and legal resources".Download Forge Consulting LLC - Unmatched resources advertising 3-14-2009 .

Full post as published by Structured Settlements 4Real on March 14, 2009 (boomark / email).