Credit Matters Blog


Kim Radok 22 April 2021

The truth is, and has always been, your business’s records and data are a potential gold mine of valuable commercial information for your business. The proviso of course, is that it needs to be up to date and in a usable format.

Too often however, a business’s records are out of date, rarely reviewed for accuracy and managed properly. Meanwhile the financial data which could be used beneficially for profitable business reviews, is locked up in an IT system designed by non-users, or by people who do not want the data accessed.

If you believe this summation is inaccurate, I challenge you to visit your business’s customer records, plus review the requests you have received for data on customer profitability. I suggest you will probably find as follows.

A fair proportion of your customer records will be unusable, out of date due to inaction or sloppy procedures. As a result, contact details will be obsolete or incomplete, delivery addresses incorrect, plus the billing processes are likely to be invalid for customers which do not buy very often. There is also unlikely to be any record keeping of changes to customer records which indicate when changes were made, and equally important, who authorised those changes.

Furthermore, in the case of lower dollar buying customers, they will often not be allocated to a dedicated salesperson. The usual excuse is that they are deemed too small to deal with and time could be better used on larger dollar buying customers. Consequently, there are unlikely to be any reviews of profitable possibilities for these customers which could have been identified if a salesperson was to actually engage with them periodically.

The solutions to these problems of course, is to actually review all customer records and visit all customers periodically. This will help to ensure records are accurate and whether there are any additional sales possibilities. The days of lazy sales and record keeping actions and procedures are over, due to the pandemic and the recession.

In regards to obtaining useful data, credit, accounts receivable and risk managers, will often ask for the real costs of dealing with unprofitable customers. In many businesses, these figures are rarely available and little effort is made to calculate them. Unfortunately, when sales and/or management are asked for this data or for it to be calculated, the usual answer is something like, “… based on our gross profit figures, the customer will be profitable.” However, as we all know, the real costs affecting net profitability and trading relationships, lie in the other costs between gross profit and net profit.

These costs are also often not included in the core record of transactions and cost allocations when calculating the net profit of any customer. We are of course talking about the number of credit claims created and processed, dollars spent on advertising promotions and the employment of additional employee resources to deal with specific customers.

It is my view therefore, before undertaking any direct action to consolidate or expand your business, irrespective of the economic conditions, care is required. You never know what your business has access to before proceeding one way or another. It makes sense therefore to actually look within your business and identify what information and resources you have or need.

For instance, it is no good consolidating your business if there are positive possibilities to grow organically based on existing resources. On the other hand, it is no good trying to expand if your business is ill-equipped to proceed because of defective business records and poor data information.

Want to know more, contact Kim at, or telephone (03) 9886 6707, A/H (03) 9802 0608, mobile 0411 649 261, or have a look at what we offer via our website at