AIG Posts Third Consecutive Quarterly Loss Exceeding $5b

Warning to firms who represent AIG:  Watch your AR.  AIG reported losses from their mortgage portfolio of credit default swaps (CDS) would be between $5b and $8.5b.  In a Reuters story published August 7th, AIG has recorded “nearly $25 billion in unrealized losses from writing down the value of its CDS portfolio”.

Although this may mean nothing as far as your relationship with AIG is concerned, it may foretell some changes internally at the company.  AIG is already known as a tough client when it comes to billing guidelines and getting paid. 

They are a public company and they still must please their shareholders.  Whenever a large corporation posts losses in consecutive cycles, job losses almost invariably follow.  Even if you don’t lose your contacts with the company, it wouldn’t be a shock to see them delay payment of bills.  Some firms already must wait 60 days after acceptance of an electronic invoice to get paid.  Considering that AR is considered in critical arrears at 90 days, that places firms in a tough spot in terms of cash flow. 

I encourage those who represent AIG to stay in touch with their contacts and keep an eye on any invoices that aren’t being accepted or are delayed longer than normal.