Credit Matters Blog


Kim Radok 03 May 2022

The 5 C’s of business are essential when starting up and operating a business. Yes, there are other essential business requirements including reputation, product, employees, suppliers, compliance etc. However, these requirements are virtually worthless in formatting the operating and survival aspects of a business.

A brief review of the 5 C’s of business are as follows.

Capital – are the funds you have available to start and operate your business and is the cash in your bank accounts.

Retained capital is also essential if a business needs to reinvent itself because of unforeseen events such as COVID, inflation and supply chain issues.

Capital does not include any potential borrowing. The additional funds which might be available from finance facilities are liabilities because they include interest payments which add to the costs of operating your business.

If there is only one thing which we should have all learnt from COVID, it is that a business without capital either soon becomes insolvent, or needs to borrow funds. By accessing other parties’ money, your business is then subject to three negative factors:

  1. an obligation to pay these funds back, plus interest;
  2. wasting time and incurring additional stress when applying for finance;
  3. where another party, i.e. the financier, now controls how you do business.

Cash – is the life blood of the business.

It is essential to pay all your bills in a timely manner to protect your business reputation. Cash is also required to take advantage of unexpected business opportunities and to pay for unforeseen negative events which may occur.

Customers – are essential for all businesses because a business without customers, has no future. When customers buy and pay properly, they become a valuable asset of your business.

Before starting your business, and once it is operating, it is essential that you always KNOW if you have customers willing to buy your product.

Customers must:

  1. be carefully vetted to ensure you know and can identify their legal their trading entity and this information must be kept up to date.
  2. pay on time;
  3. be treated with respect;
  4. be able to buy from your business with a minimum of problems.

Credit – is either a reputation or an asset to be protected. Its importance to your business must never be underrated or abused.

When credit is owed to other parties’ it must be treated respectfully and repaid within agreed terms to protect your reputation. A positive payment reputation provides the cheapest interest rate for any borrowings today and into the future.

Credit which is owed to your business should be seen as the golden goose of business. B2B credit is essentially free finance provided by your business to your customers with the purpose of increasing sales. In other words, your business is paying a cost to your customers to buy your product or service. In doing so, your business is taking all the risk by becoming a financier to your customers, plus the cost of supplying your product or service.

Therefore, it is essential that all B2B funds lent, (credit) are paid as per the agreed terms. Your B2B credit must always be protected by properly prepared, completed, and legally enforceable documentation.

Confidence – is the ability to operate your business legally, and in a manner, which you, the owners and managers want to operate. For instance, the ability to say NO to unprofitable business propositions put forward by your customers, is emotionally empowering and worth dollars in the bank.

This aspect is often underrated because saying NO, does not mean that business cannot be conducted. It does however force your customer to consider negotiating with you if they want your goods or service. After all, a business without a product or service has nothing to offer its customers.

A business will rarely survive for long if it becomes subservient to its customers. In today’s business environment, we have already seen far too many businesses lose their way and become servants to their customers, and/ or worse still, insolvent.

In conclusion, it becomes obvious that the 5 Cs of business, Capital, Cash, Customers, Credit and Confidence are the building blocks of starting and operating a successful business. The one positive of COVID, which has been clearly demonstrated, is that these building blocks are reinforced as being essential for all businesses.

Want to know more, contact Kim at, or +61 3 9886 6707 Mobile 0411 649 261, or have a look at what we offer via our website at