Credit Matters Blog


Kim Radok 20 January 2022

If your business offers B2B credit, the reasons why you may not be paid this year are many. Here is a brief list of the major reasons.

Within Your Customer’s Business

  1. Management is afraid of their customer(s) and so they don’t get paid as quickly as they should, and neither do you as a result.
  2. The business is a zombie business, or trades with a number of zombie businesses and all are, or basically trading insolvently.
  3. It, or their customers, owe the ATO for unpaid tax and other commitments.
  4. Their management does not believe you are serious about being paid in a timely fashion.
  5. They see your business makes many mistakes, is unhelpful answering enquiries and general customer service is appalling and slow pay as a result.
  6. Your business is unable to deliver products and services due to supply chain issues.

Externally To Your Business And Stakeholders - Covid Related Issues

  1. Lack of employees in many industries.
  2. ESG (environmental, social and governance) requirements.
  3. Political and bureaucratic regulations.
  4. Vested interests advising all will be OK in the future after the virus goes away.
  5. Debtor rights on the increase at expense of creditor rights.
  6. The large losses due to increased activities of consumer and criminal fraudsters.
  7. Poor implementation of technology in to business processes at the expense of professional and dedicated employees.
  8. Inflation and expectation of increased interest rates sooner than expected.
  9. The debt owed by and owing to you and your customers.

Within Your Own Business

  1. Government, bureaucratic and social expectations affecting your business operations.
  2. Covid related issues due to lack of employees and supply chain issues.
  3. Naïve or poor management decisions due to a lack of discipline and commercial nous.
  4. Management lacks an understanding of the positive opportunities provided by risk awareness.
  5. Increased operating employment costs.
  6. The juniorisation of employees rather than keeping on, or finding experienced employees.
  7. A history of continually repeating the same mistakes and failing to stop the causes of these mistakes.
  8. Failing to answering enquiries quickly and effectively, plus poor customer service.
  9. A past history of condoning slow payments
  10. Management and sales are afraid of their customers.
  11. A failure to stand up for the business’s rights to be paid.

What Can Your Business Do?

There are many positive actions your business can do in light of the above factors.

The first action starts with a critically “no holds barred” honest appraisal of your business. This appraisal should preferably be completed by an experienced and trusted critic with no further expectations of work to cloud their final report.

If the above option is not available, a serious SWOT analysis based on the known facts of your business’s finances and resources. The results are then compared against the economic realities of the business world in which your business operates.

The main findings of either of the above appraisals should reveal whether your business can operate safely in the future, all other things being equal. The appraisal may also review if your business has the capacity to continue to operate effectively according to the following factors.

  1. Does management and the owners have the stamina and financial means to keep going in the current turbulent environment?
  2. Is the business able to survive any deficiencies identified which can be rectified quickly?
  3. Is a capital injection required and if so, is the business able to access the necessary funds?
  4. Is the business currently operating as a zombie business which can be rebuilt?
  5. Is the business already trading insolvently?

On review, if there is a strong case that all things are OK, you can proceed with greater confidence. On the other hand, if there is any doubt about the viability of the business, you must consider closing down the business.

The first issue to overcome when deciding whether closing your business is the best option, is to overcome the issue of your PRIDE. Too often, and I am no exception, we hang on to our unprofitable business because of a perception of failure. It is best to understand if the pride of being perceived a failure is only in your mind or is a reality. In either case, making a positive decision for your long-term financial and reputation is far more important than making a bad decision based on worrying about pride.

If your business is basically unviable, it is best to act quickly to minimise the chances of not paying all creditors and employees in full, or trading insolvently. This process will be painful, however remember, you are taking such actions to minimise the loss of your financial and future reputation.

The world of today and tomorrow is vastly different from that when you first started your business. The main factor of change now is that there is every indication if you sell on B2B credit without proper process and disciplines, you are more than likely to find that your invoices will not be PAID.

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