The Cost of Bad Debts

Too often, business people forget the true cost of writing off bad debts. There are two diametric approaches to writing off bad debts.

The first is write them off as quickly as possible and to move on (with no or little thought as to the cost). After all, done properly, they are a tax deduction.

The second is to hang on to accounts or invoices because the business owner/manager only sees the loss of an asset at the write off, not the clearance of on-going liability costs.

Irrespective of the approach, bad debts can be very costly in somany ways as Mark points out.

How to Become a Master Relationship Builder!

Regretfully, many business owners and managers enter in to business without realising, one of the key attributes they need, is the ability to develop relationships with other people.

In business, developing relationships is not merely about knowing how to talk with similarly minded other people. A business person needs to be able to develop relationships with their employees, suppliers and customers, even with those whose values and beliefs are different to ours.

The importance for developing relationships with people whose values and beliefs which are different cannot be over-emphasised. It is how these people operate, think and express themselves, which gives us an insight to how they may operate their business endeavours which is so valuable in developing strategies for our own business.

Below, Vesna provides seven tips to help you to start developing stronger business relationships.

Being Small is Great

In Geoff's blog, he focuses on why business owners (and indirectly, their employees) need to understand what it is they want for their business. Until a vision and an understanding of what type of business you want is defined, it is difficult to create the right strategies for the business.

Every business will have specific strengths and limiting issues which are particular to their business. As Geoff points out, you can have a "giant of a small business" which can be equally profitable and enjoyable to work in as any of the major corporates.

The wise business owner or manager will understand the issues raised by Geoff and create appropriate operational functions which will suit their desired business.

How to Separate Fact From Fiction

In this blog, Dean Kaplan introduces concepts on how to distinguish the difference between the truth and false or misleading information supplied by debtors. As usual, Dean has managed to explain matters in a simple and easily understood manner.

One of the key attributes of Dean’s blogs is how they apply equally to the debt collection and accounts receivable environments.

TAKE CARE Please note the methods and the actions explained by Dean to obtain additional information, apply only to the US. Different Legislative and Privacy circumstances apply in different countries on what might be obtained, how the information is obtained and how it is used.

Why Sales And Credit Departments Need to Work Together in Australia

Ferdi Nel's blog on the need of sales and credit departments is so true. You need only to remember the old saying "A sale is not a sale until the money is in the bank" to see the merit of this blog.

You may also recall the other adage of from the sporting world. "A champion team will beat a team of champions." We see evidence of this saying in every team game. The fact is, this saying also applies in business.

If your business of champions is not working at the moment, have a read of Ferdi's blog. You may well see opportunities to create a champion team within your business to increase sales, cashflow and profits.

Defining Vital Boundaries

Geoff Flemming's blog is about defining boundaries for employees and we could leave the blog with that focus alone. However Geoff's blog is also a timely reminder about the need for setting boundaries for all business interactions.

As Geoff has described the need for setting boundaries for employees, so we need to set performance boundaries for our suppliers, customers and related business associates. Without setting these boundaries, your business can not expect to control the desired outcomes from these business relationships.

Get an Edge on Your Competition

In her blog Vesna talks about getting an edge on your competition and provides three examples for you to consider.

The importance in gaining an edge over your competitors is also about knowing how your risk management practices give your business an advantage over your competitors. For example, Vesna discusses the importance of building relationships with your employees and customers.

There is no doubt, employees and customers can provide your business with essential information which is essential in gaining an edge over your competitors. This information includes customer behaviour, payment habits and new products. This information is essential in increasing sales, profits and reducing bad debts.

Therefore when talking about getting an advantage over your competitors, think about how your risk management practices can aid this competitiveness.

Is It Safe To Open A PDF You Receive Via An Email?

Like most people, I have come to accept the principle that it was reasonable safe to open a PDF document attached to an email. However as Kelvin explains, the same does not always apply.

I suggest this is a timely warning and you will review the way you look at all emails and the attachments which you receive.

In addition, we see once again in Kelvin's article, the ingenuity and methods fraudsters go to in an effort to steal your assets and well-being.

People Buy From Friends

Kurt Johansen recently wrote an article titled "People Buy From Friends"

The theme of Kurt's article was the importance of establishing a repour with other people in business. On this point, I agree with Kurt. Establishing a friend-like business relationship with your suppliers and customers, does bring its own rewards.

There are number of important points raised by Kurt in this article about dealing with people in business. I have chosen to use a number of these points as a basis to write a blog on my perspective about friends in business this month.

ATO’s Tough Line on Directors

There has been a change in the way the ATO operates in regards to a company's unpaid PAGY and Superannuation tax debts. They are now holding the company's directors personally liable for these debts.

There continues to be great deal of press lately about these changes in the media. Whilst the media's interest is focused on Directors, Mark Logue highlights there are issues for trade creditors and credit managers.

How To Win An Argument And Soothe A Debtor

Arguments are easy to start. They are difficult to control once they are started. Any argument once under way, is something like an avalanche; it just gets bigger and nastier as it gains momentum.

Dean Kaplan provides helpful hints and insights on how to avoid an argument commencing in the first place. As Dean explains, you may win the battle but lose the war – because there are rarely any winners in arguments.

Whilst Dean’s article focuses on debt collection scenarios, his strategies and comments apply in any business situation.

Never Caught Short At Tax Time

Business people often have trouble managing their cashflow. Demands and opportunities and the next development of the business, all demand cash.

In addition, certain payment responsibilities are paramount in the maintenance of your business's creditability. Essential suppliers are one such party which demands attention. The tax department is another essential payment priority. Get the tax man offside, and real problems can occur.

One way to ensure you pay the tax man on time is to follow Rod's tip. Remove the temptation to pay for other business expenses and bank the GST collected from your customers. Withdraw these funds out of the main bank account and place in a special account which earns interest.

Not only will you earn interest, small as it may be, you can also keep the tax man happy.

Remember, a happy tax man equals a less stressed business owner.

Growing Up - Expansion and Acquisitions

As Geoff Fleming explains, it always wise to consider growing your own business. There are a number of ways in which we can grow our business, for example organic growth or acquisition.

Geoff also explains why some business owners fear getting larger. Whilst this is a natural fear, sometimes this fear can work against your best interests. As a case in point, some time ago, one of my friends was given an opportunity to expand their business. Instead they decided to consolidate their business and nearly lost it altogether.

On the other hand, whenever we undertake an expansion of our business through acquisitions, as Geoff explains, there can be unforseen problems. Geoff lists some of these potential problems in his article.

Later in the month, my blog will talk about the some issues of an acquisition from an accounts receivable - cashflow aspect, rather than a business wide perspective put forward by Geoff.

I believe it important to consider both viewpoints and Geoff's article is timely in that respect.

Mental Preparation for a Commercial Collection Call

Dean Kaplan's blog is a lesson on how to make a telephone call in business. Irrespective of whether you are in sales, customer service, accounts receivable or debt collection, the proper preparation for the contact is essential.

If you have no other educational source of how to make a telephone call, then Dean's blog is an excellent source place to start.

Incidentally, the same theories apply to any letter or email you send. 

Planning For Disaster

Rodd Perrin writes about data protection and the importance of backing up all your data.

How right he is. For instance, how would you prove the customer placed an order by email if your computer system was damaged and you could not retrieve a copy of the email?

It is a sobering thought that lost data is just not your accounting records, it is copies of emails, purchase orders, date invoices were sent etc. Without these details, you may not be paid for any outstanding invoices or to prove your case in Court.

Therefore Rod's article is not just about backing up vital data, it is also about protecting the evidence which helps you get paid.

Debt Collection Calls ARE Customer Service Calls

Michelle Dunn is a respected writer of Credit Management and Debt Collection issues from the US.

Recently Michelle wrote a blog titled Debt Collection Calls ARE Customer Service Calls. I agree with her summation of the nature of the calls ALL debt collectors, credit and accounts receivable employees should make to their customers.

I would also suggest this attitude reminds us of the old saying they “… had an iron fist in a velvet glove”. In the majority of debt collection or accounts contact, history reveals success generally comes through a taking “customer service” approach with your customers.

It is also wise to remember, if you are too demanding you scare away or alienate the customer. Alternatively if you are too aggressive, there is always an officious bureaucrat or politician in the background just waiting to defend the “innocent” customer with another law or lawsuit against you.

Finally, we know what may have worked last year, may not work this year. If you were too demanding or too aggressive last year and that attitude did not work, why not consider a new approach as suggested by Michelle for this year? We are sure you will see much better results.

How to Stop the Doom and Gloom and Stay Focused During Challenging Times!

There are tough times ahead in 2013 and whilst we need to keep an eye out on the dark side of these times, we also need to remain positive.

Too many people will continue to focus on the bad issues exclusively without acknowledging there are also opportunities at the same time.

When business people focus on the negative, all their worst fears come true. More so, positive energy drains out of them and they enter a dark area which makes looking for the positive, so much harder. 

Therefore the strategies which are included in Vesna's blog are designed to help you overcome the dark-side of business. If you can manage the dark-side of the current business environment, you will also start to see the positives.

How To Improve Personal Productivity

Rabi Gunaratnam has written about how to improve personal productivity.

As financial risk management professionals, we ask our clients to be disciplined in how they deal with their customers, employees, associates and suppliers.

However we may forget that we too need to be disciplined in our own professional lives to achieve maximum efficiency in our business.

Rabi's article is a timely reminder to us as we approach year end, to set new goals of professional behaviour for ourselves. As we set our goals for the New Year, this article discussing personal disciplines may be valuable as you set your own personal goals 2013.

Avoiding the creditor trap

Colin Porter's blog reinforces the important of managing credit in the supply chain management industry.

The three key points are the start of developing and granting of credit facilities for your customers. Furthermore the objectives are simply put and easy to read.

If your business has not developed credit policy or it is time to review your existing policy, Colin's article is a timely reminder of what you should do by:

1 developing a credit policy suited for your business;

2 ensuring you have the ability to assess the credit worthiness and payment record of your debtors;

3 reviewing your resources to manage the on-going credit risk effectively.

The granting of credit to customers is a normal part of doing business and can be profitable if done correctly. However, granting credit badly is a costly exercise if you get it wrong.

Have You Sold Yourself to ... Yet?

Are you sold on your business vision, products, services, skills and ideas? Do you doubt yourself, not trust yourself, feel not good enough, fear rejection, etc?

Would you like to have fewer objections and questions from prospects, customers and your team? If so, then the following information may help you regain your composure to be a better business person.

The 5 BIG Roadblocks to Business Success (and how to avoid them)

Paul McCarthy's latest newsletter has words of wisdom which apply across many different business professions and applications.

Paul may not have intended for his Roadblocks to be applied in our world of financial risk management. The truth is however as you read these Roadblocks you will see how these same factors apply to our profession.

Equally important, people learn in different ways. The information in Paul’s article is from another viewpoint; sales and marketing. Consequently, a number of people may be more inclined to think about how Paul’s Roadblocks affect the issues they face, and act upon it. The different language and themes suddenly help people see what they may not have seen previously.

GST Changes to Hire Purchase

Joe Serra from Serra Finance reports on Government changes to the GST treatment on Asset/Hire Purchase finance facilities.

These changes have influenced financiers and brokers on how they view these products after these changes and their worth to their customers.

In light of these changes, Joe believes the Chattel Mortgage product is the more GST user friendly as opposed to HP and Leasing.

Attitude and Altitude

Attitude is so important in business.

If you have doubts about your place within the business community, this is reflected in how you deal with your suppliers and customers.

This blog article reflects the many aspects of your attitude and applies equally to business owners, managers and their employees.  

Your Business Name

The way you register your business name has changed from 28th of May 2012.

Therefore, if you use a different name which is different from your company name, it must be registered.

Will I Get Paid?

Will I get paid?

This is the question all business owners and managers responsible for extending credit, need to ask regularly.

There are a number of different methods by which we can test a customer's creditworthness.

One of these methods is by peer group networking.

Sell the Payment when you sell your product or service.

Many business people train their salespeople to sell their goods and services on credit, believeing they have no other choice.

However, many of these same business people, do NOT train their salepeople to SELL the payment part of the sale and to look for other payment terms other than on credit.

One of the keys to being paid for your sales is to train your salespeople to sell the payment and credit terms as well as the product and service.

This blog addresses some of the ways your business can sell the payment part of the sale other than on credit.

Who Are They?

The internet is a great sales and purchasing prospecting tool for  business people. Unfortunately, not all email contacts are from a person or business that will add value to your business.

There are many useful tools you can access via the internet to help you identify the person or business sending the email.

Maintaining your business creditability and ensuring you get paid, are vital for the survival and growth of your business. Knowing who sent you these prospecting emails, is an essential component in achieving  these survival and success outcomes.

Credit management for tourism operators and arts venues – on what terms?

Every industry likes to believe it is different from other industries. If that is your view, and you operate a business specialising in the tourism or arts sectors, read Darren McClelland's article about credit management issues in these sectors.

Darren McClelland is the Director of Enjoy Inspire Consulting Pty Ltd a business which sepcialises in helping businesses in the tourism and arts sectors.

CREDIT Dangers of a Dominant Owner

I write this piece with all due respect to Owners of businesses who have invested their life savings and hard work in a business, or simply the respect due CEOs who manage businesses.

My experience in the Credit World for over 40 years is that those same Owners/CEOs  often forget that they have hired experienced Credit Managers and staff to guard one of their most precious assets – THEIR ACCOUNTS RECEIVABLE – Probably one of the largest assets on the Balance Sheet.