Credit Matters Blog


Kim Radok 26 September 2021

If your business has any form of debt and you are not up to date with its status, the long-term welfare of your business is compromised.

Irrespective of whether your business owes debt, or is owed debt, the business world never sleeps and is always in a constant state of change. Your business therefore should always have an up-to-date strategic plan on how to keep liabilities and unpaid invoices to a minimum.

A review of the following factors concerning debt is worth reiterating.

Debt owed by your business

Due to the current pandemic, we have seen that debt owed has often become a negative problem, and this situation will continue as the global recession deepens. Here are a number of obvious facts about debt.

  1. If the debt is secured, the financier will have your signed authority to manage your business if they perceive there are problems, irrespective of whether you are aware of these problem(s).
  2. Debt owed needs to be repaid, irrespective of whether your business has the cash available to make those payments as they fall due.
  3. The repayment of debt restricts your business’s future ability to make payments for essential goods and services.
  4. Interest payments are tax deductable, however, you do not get back dollar for dollar equal to the dollars spent.
  5. If your reputation for slow payment persist, your business may not be able to access FREE B2B credit.
  6. If you are unable to pay debts as they fall due, your financial reputation and integrity are at stake.
  7. If you lose your reputation, costs increase and/or credit is often refused when sought.

Debt owing to your business – In-house issues

If the process of granting B2B credit is not professionally completed, your ability to be paid for invoices raised and paid in a timely manner, is compromised as follows.

  1. A lack of proper contractual documentation with valid and signed off trading terms of trade which defines when payments are due, and the consequences if payments are not paid.
  2. The business lacks sales disciplines and proper operating procedures, which results in unprofitable sales or bad debts.
  3. Sales and management overrule credit or accounts receivable decisions relating to billing, stop supply and poor customer service ethos.
  4. Management is unable to make tough decisions due to a lack of organisational self-esteem, or because of their own vested interests.
  5. The business is operating short staffed, or employees are overworked, unprofessional and/or lack inexperience.

Debt owing to your business – customer related issues

  1. The customers believe they are not bound by signed terms and conditions and so commit fraud whilst knowing they will probably never be held to account.
  2. The customer’s management pay slowly because they are unchallenged, or because they play one supplier off against another.
  3. The customer’s business is disorganised, or lacks key people to make decisions. 
  4. The customer’s business is more like a government bureaucracy than a real business, which means their employees often have no commitment to protecting their business’s reputation.
  5. A key contact within the business leaves and no prior information is provided of their replacement.
  6. A key contact leaves suddenly, or becomes ill, and there is no ready replacement.
  7. Due to lockdown, a customer’s business is forced to close, either temporarily or, when it becomes obvious there is little chance of trading out of insolvency.

As we have already seen over the last eighteen months, debt has become a major negative issue for many businesses worldwide. Whether the debt is owed by your business or is owed to it, has been irrelevant. Furthermore, management should understand that although the business may not operate 24 hours a day, any debt is subject to change 24 hours a day.

In light of the above, there should be no let up on ensuring your business’s affairs are always up to date so that if the status of your business’s debt changes, any damage is minimised. This objective can only be achieved if your business has the right strategies and resources available to minimise any potential damage should negative factors be encountered.

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