While a majority of the 80,000 U.S. bankruptcies over2008 and 2009 stemmed from the economic crisis, many others occurred due tobusinesses' poor oversight of such critical functions as changing marketconditions, overstocked inventories and chronic customer delinquencies.

"A good economy can cover up many problems,"said Katie Goodman, managing partner of Atlanta-based corporate rescue firmGrisanti Galef & Goldress. "But in a bad economy they quicklyshow."

Goodman led a session titled "Advising the TroubledBusiness" at the AICPA Practitioners Symposium & Tech+ InformationTechnology Conference, here.

"The recession did not cause all the problems,"she said. "Many businesses failed to see trends, they hired and kept thewrong people, were overly optimistic, and had weak accounting and financefunctions."

Other common pitfalls in distressed companies included afocus on EBITDA or net income, instead of cash flow and incurring excessivedebt levels.

"One of the most important survival tactics iscommunication, particularly with lenders," she said. "There's stillfinancing out there, but the loan covenants will be higher and stricter. Youmay have to look at alternative lenders. You have to continually reviewaccounts receivable, identify risky customers and enforce your creditpolicies."

She said she has advised many of her distressed clientsto sell their excess and obsolete inventories, shorten the procurement cycle, andbegin marketing again by targeting specific customers.

She also stressed regular meetings with company employeesand keeping them apprised: "If you have scared employees, they will not beproductive."

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