Credit Matters

Invaluable Reading From Australia and Around The World

Contributing to our position as Australia’s premium Financial Risk Management resource, our management globally explores and surveys relevant and valuable articles published by respected professionals, academics and organisation. The articles offered here are suggested reading for any Business Owner and Financial Risk Management professional.

Invaluable Reading From Australia and Around The World

Accounting

Customer Selling Their Business Beware!

Dean Kaplan

23 Jun 2015

There always seems to be another reason why your account never gets paid. One example, as Dean Kaplan advises, is when your customer decides to sell their business

All too often, when a small business is up for sale, the net result for many of their suppliers is increased costs and a bad debt. If you hear that one of your customers is selling their business, review the situation before doing any further business with that customer.

The four critical questions you need to consider in these situations are:

1  Why are they selling their business?

2  Will the customer have difficulty in selling their business?

3  What will happen to your debt after the business is sold?

4  Have you red-flagged the account and warned all staff to be vigilant in their dealings with this account?

If a customer has never contacted you about selling their business prior to the sale of that business or you have lost funds previously in similar circumstances, Dean Kaplan's article is worth a read. You may still not recover your debt. However you have at least an idea of how to deal with this situation, with the possibility of reducing any loss.

Some Customers Are Not Worth Doing Business With

Shep Hyken

16 Jun 2015

Shep Hyken presents a blog discussing the concept "that all customers are right!"

As a credit management professional, I know the problem caused by customers which are not right. I see such issues through the blatant changing of payment terms, constantly raising invalid credit claims and the reasons used to justify their slow payment behaviour.

Mr Hyken raises two more important aspects of dealing with the wrong type of customer. His view is that bad customers (i) suck the energy out of your employees and therefore this can lead to (ii) the destruction of your organisation's culture.

You probably know the feeling you have when dealing bad customers. There are some customers who seem to believe they have the right to use your goods and services and not pay for them on agreed terms. In addition these customers try to blame your employees for any issues which are clearly the fault of the customer and not of your business.

As Mr Hyken advises, bad customers destroy value and it is perfectly okay to "sack" them.

If ever you need support in dealing with bad customers and wonder if they are worth keeping, perhaps you should have a quick read of this article. It just may help you say "not every customer is right all the time!"

10 questions you need to ask your accountant

Jason Smith

15 May 2015

Jason Smith is right you know. As business owners, we are often so busy working in our business, we forget to take the time to work with our Accountant on the business. As is usual, we rush to prepare the figures required for essential returns, drop them off with the Accountant and rush back to work. Rarely do we take the time to actually review the figures to ascertain whether we can make improvements to our business.

There are a number of parties you could consult on various aspects of the business to improve your business. For instance you might consult with your credit management adviser or debt collector, the marketing firm which you work with, etc. Your accountant is another person you should liaise with regularly to ascertain whether your business can be made more efficient and profitable.

If you have not taken the time to discuss your business affairs with your Accountant for some time, Jason's article has 10 topics you can use to prepare background information before starting that conversation.

What role for the CFO in credit management?

Bertrand Mazuir

20 Mar 2015

It is not often you have the opportunity to read an article about the role of the CFO in the credit management process. Therefore it is interesting to read Bertrand Mazuir's review.

Finding the best way of operating a business is an on-going process of evolution. Therefore we should periodically review all aspects on the way we operate our business. These aspects under review should include the processes used, the people we employ and the titles we give them and their operational duties.

The CFO and Credit Mangers roles are no different. In preparing our review, the questions must always be: are these positions fulfilling the needs of the business at this time and do the respective people have the required skill sets for these roles? Bertand's review is one such opportunity to encourage you to evaluate these roles within your business.

Furthermore, irrespective of the size of your business, and even if you do not have the personnel to warrant such titles, you should be occasionally evaluating your own business processes and the people completing the roles of CFO/Accountant and Credit Management.

The 5 legal issues to watch out for when investing in a franchise

Katherine Hawes

23 Feb 2015

Franchising is becoming an option for entrepreneurs by which they can enter in the business environment in one of two ways. It maybe as a franchisor who had a viable business and thought it would make a profitable franchise. Subsequently the franchisor prepares a franchise by which other people can buy in to and operate as their own business.

Less experience businesspeople often enter in to a franchise and provided a business structure and supported by the franchisor.

However you chose to participate in a franchise arrangement, there are legal codes which you should be aware of in order to protect your investment.

Katherine Hawes presents five legal issues which you would be wise to consider and explore before commencing any franchise relationship. The five key issues covered in Katherine's article are:

The Disclosure Document

The Code of Conduct

Buyback clause at the end of the franchise

Providing ongoing support

Establishing too many competitors

As usual, this information is a guide only and you should seek further legal advice before proceeding with any franchise agreement.

Cloud Accounting Yes or No?

Peta Schimming

9 Jan 2015

Technology offers wonderful applications and tools for use in our business. One of the more interesting concepts is the use of cloud based products.

Peta discusses the possible benefits and negatives of using cloud based accounting systems. However many of the issues raised by Peta apply across all cloud based products and services.

If you are still wondering about using cloud based products, Peta's blog is worth reading as a start.

ATO Friend NOT Foe!

Peta Schimming

27 Nov 2014

In business, there are times when we have to interact with organisations which may not always our favourite business partner. In truth, most business people would argue the ATO as a party which does not add value to their business. Obviously many business people would not disagree with the previous sentence.

Unfortunately, whether we like it or not, the ATO is a serious player in our business affairs. As a result, Peta encourages us to take a proactive approach to our dealings with the ATO. Unless the circumstances are exceptional, the ATO is usually willing to work with you to resolve a problem rather than fight you (notwithstanding the ATO will probably always win).

There is also another business message you can take from this article. If you work with your suppliers and customers in a reasonable manner, many short-term problems can be resolved and so enable you to continue with the business relationship.

Is Your Credit Policy Costing You Money?

Dean Kaplan

24 Aug 2014

Many years ago, when I first became involved with lending and advancing credit, I was advised that a reasonable level of bad debt write offs, was sign that you had maximise selling and profit opportunities. This case was put to me during my years involved with both consumer and business to business lending.

An open slather policy on advancing credit, is usually a good way of going broke and is not advocated. However a balanced approach about why you are in business, what it takes to succeed and how you should extend credit are questions should lead you to understanding why a level of bad debts is not always a sign of a business in trouble.

Therefore Dean Kaplan's article raises a valuable business question; "Is your credit policy costing you money?"

On that basis, Dean's article is worth reading as start for re-evaluating your credit policy and or learning about advancing credit.

 

Uncovering cash and insights from working capital

Ryan Davies and David Merin from McKinsey & Compan

24 Jul 2014

As the authors of this article so wisely articulate, managing a company’s working capital isn't the sexiest task in business. However as they also point out, it is extremely important in maximising the opportunities of improving cashflow without increasing sales or reducing expenses.

The most important part of this article is the authors' explanation of the cash which is tied up in a company's accounts receivable operations. In studying their work more closely, you will begin to realise the benefits of reviewing your accounts receivable operations.

We also find out why management and CFO's, particularly in the larger corporate companies of the world, do not concentrate on the receivables to the extent that they should.

I suggest this article is well worth reading if you are interested in improving your company's cashflow, profit and efficiencies, irrespective of the size of your business.

 

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