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

Receivable & Credit Management

Late Fees: The Hows and Whys of Charging Them

Dean Kaplan

10 Jul 2019

Dean Kaplan raises a useful idea to help collect outstanding the funds owed on unpaid invoices which is to charge interest for late payments. Obviously, you will need the customer's authority to charge this interest and you must only use an allowable interest rate.

There are many rights you can include on your credit agreements, like this right to collect interest for late payments. The key point of this article is to have negotiation tools to help you recover the funds owed for late invoice payments.

It is not mentioned in this article, however if the customer refuses to sign your agreements which includes rights to protect your business, this is an indication the customer may be untrustworthy. You can also find more information about the importance of having a properly signed credit agreement in our Members area at www.creditmatters.com.au under our Red Flags feature.

In the meantime, Mr Kaplan's article provides useful information about one of the key rights which may protect your business. The right to charge interest for late payments is a useful tool when collecting monies owed for unpaid invoices.

 

Banks rejecting SMEs for finance

Loren Webb

25 Jun 2019

This article provides the basics of the facts that the banks are reluctant to lend to SMEs and points out that there are other sources of finance available. Nothing in business is ever that simple, however. For instance, where is the cheapest form of finance? B2B finance of course.

The trouble for B2B credit providers is that now as the number one target for credit poor business customers. As a result, they have to be ever more vigilant and disciplined. Of course, with every negative, there are also positives. It is up to the B2B credit provider to work out and structure their business to take advantage of these developments.

The first place to start however, is to do some research and then decide how to move forward with confidence. One such source of information which may provide some useful data and promote critical thinking, may be this article.

 

Australia: what can businesses expect?

Atradius Report

17 Jun 2019

Atradius have produced a brief report on the Australian business environment today regarding payments, bad debts and the state of credit management strategies.

The report is brief. I suggest however it is worth a read for all business owners, managers and associated professionals interacting with Australian businesses, particularly if your business is offering B2B credit.

Pick up the phone!

Ingrid Maynard

30 May 2019

The author Ingrid Maynard, highlights one of the key elements of good business, being able to use the telephone. Ingrid further articulates the reason why telephone calls are so effective.

Today, it is not just salespeople which seem to have trouble picking up a telephone and talking to another person. This issue is across the whole business spectrum from management down. Too often, it seems people at all levels of business are almost frightened about making a telephone call. We also note that too many business websites appear to lack a telephone contact number or if you do make the call, speaking with the correct person is also a challenge.

Yet picking up the telephone and saying, "There seems to be a problem with ... can you please help", making a warm contact for a sale or trying to close a sale, is so effective.

Irrespective of whether you are in management, sales, accounts receivable or customer service, the telephone remains one of the most useful tools in business. If you have trouble understanding why a telephone call is so valuable, I suggest reading this article may prove helpful.

'If you want to worry about something ... this is it': Central banks, investors sound alarm

Paul Colgan

27 Mar 2019

Paul Coglan drew our attention in October 2018 to issues of available finance and the types of finance providers which were then available. The issues raised by Mr Coglan have not gone away. In fact, they are more important than ever before.

As 2019 year has shown, world-wide there are signs that a down turn in business fortunes is increasingly obvious. When businesspeople are desperate for funds to keep their business going, they do not always pay enough attention to all factors involved in obtaining the finance. For instance, they rarely pay attention to the ethics of the finance providers, the price of the finance and the potential negative consequences if things go wrong.

In these circumstances, it is not only the financial viability of your customers which is at stake, the financial well-being of your own business is also at stake. If any of your customers have resorted to finance providers even further down the reputation and cost ladders, there are even greater risks.

In case you are unsure of these issues and you wish to learn more, this article may be worth a read to help you comprehend the risks to your business.

Better A Year Early Than A Day Too Late

Adam Taggart

5 Feb 2019

As the author, David Taggart suggests, trying to predict the timing of disruptive events is a fool's errand. Very few people can predict the exact time of a future disruptive event. We can predict what might happen by looking at the causes of historical events and what is happening around us. In such cases, even if our predications do not eventuate in full, those that acted early can gain an advantage.

Mr Taggart offers the following example of people who paid attention in the years leading up to 2008. These people had arrived at the conclusion that bad policies and overly-loose lending standards had resulted in bad situation which would eventually lead to real problems. Did these people know the date of the tipping point? No. But they knew the probability for a major financial crisis was a certainty.

He goes on to suggest, the people who positioned themselves early avoided the losses that everyone else suffered and a few, even made massive profits.

Today we face a similar situation with an expected business down turn in 2019 and 2020. There may even be a recession. Do we know when this downturn or recession will actually be declared? No, but that does not stop the more prudent of our fellow business and social acquaintances starting to take precautions to protect their business and other assets.

Waiting for the exact date of a disruptive event is never wise. Irrespective of whether you believe we are about to have only a downturn or a full-blown recession, it is better to consider a more cautious approach in the coming year. On that basis, reading Mr Taggert's article may be of benefit in helping you decide whether to start taking action before the effects of any downturn impact negatively on your own situation.

 

How to identify a bad client: 5 warning signs to look out for

Patrick Coghlan

13 Dec 2018

The author Patrick Coghlan has prepared a brief introduction on five warning signs that indicate you may be dealing with a potential bad debt.

One of the key issues in business is to understand the signs which indicate a potential or existing customer may leave your business with a bad debt.

If you are unfamiliar with the indicators of a bad debt, or just need a refresher on the indicators of the causes of a bad debt, this article may worth reading.

The Best Payment Reminder: Top 10 Strategies

Jan Reeves

14 Nov 2018

Jan Reeves is a proven credit management professional. She has prepared a list of 10 strategies that have worked for her over the years when following up on unpaid invoices to improve cashflow.

Like Jan and myself, we never stop learning. We are therefore always on the lookout for new strategies on how to deal with our customers regarding unpaid invoices.

 If you are looking for new strategies to use with your customers and improve your business's cashflow, reading this article maybe of value.

Does Your Sales Team Work With You or Against You?

Nancy Seiverd

9 Nov 2018

Nancy Seivers is an experienced debt collector from the US who has written an article focused on helping business people understand the importance of sales and credit people working together. Irrespective of which country you operate in, building a business team that works together is essential. Building a business team, is like building a sporting team where everybody understands their role in helping the organisation achieve its maximum potential and "win the game."

Equally important, as Ms Seivers points out, is the role of management in developing cooperation between different groups within the business. Likewise, effective credit management and sales cooperation starts with support from senior management. Without such support and endorsement, a team-like relationship is unlikely to develop. 

This article may be of value for those managers and team leaders wishing to create cooperation between credit and sales employees to assist their business to maximise sales, cashlfow and profits. After all, that is the end game of operating and managing a business.

Contracts must be built on ethics, because they can even confuse lawyers like me

Clare Payne

30 Sep 2018

Claire Payne's article about contracts appears to be based on those prepared for the banking and finance industries. Notwithstanding this focus, many of the issues raised by the author also apply in the B2C (business to consumer) and B2B (business to business) environments when extending credit or completing customer projects.

There have been many changes to Legislation and a focus on unfair contracts in recent times. The author's article is a timely warning that your business contracts need to be both relevant and ethically fair. To rely on old contracts which contain unrealistic rights and penalties, are poorly constructed, with terms which you don't understand or are basically unfair, is a waste of time and money.

Therefore, reading this article may be of value in helping you understand the importance of having up to date and professionally prepared contracts for your business.

Avoiding Friendly Fire: Working with Sales People

29 Aug 2018

The author of this article is unknown, however the message advocating credit and salespeople working together is as important today as it has always been.

There is considerable evidence, when the two departments work together, sales increase and additional benefits accrue to the business.

There will be always a level conflict at times between the two departments. It is encumbered on management to ensure that these conflicts do not develop in to adversarial exchanges. It is in such circumstances, which creates a toxic culture which causes negative consequences for the business as a whole.

To assist in avoiding the development of a toxic culture, nine (9) strategies are suggested which can assist in reducing adversarial contacts between the two departments.

If you wish to create a more collegial working environment in your business, this article maybe of value in helping you to achieve this objective in your business.

Accountants say elder abuse spike as mortgage stress sets in

Miranda Brownlee

26 Jun 2018

Miranda Brownlee advises that service providers are starting to see a greater number of elder abuse cases.

Of course, the fleecing of elderly people by children, family, carers and friends has always occurred, and regrettably always will. The difference is today. many more people are aware of what elder abuse looks like and its effects on the welfare of the elderly.

The causes of elder abuse exposed appear to be mortgage stress, to cover business costs or where the perpetrators of elder abuse suggest there are better investment opportunities. If you look beyond these factors, other problems may become more obvious. For instance, the economy may not be in as good shape as some commentators maintain, financial pressures are building up for consumers and finance for business and consumers alike, is increasingly difficult to obtain.

These factors should also be noted by business people as their business is not isolated from what goes on around them. When times are tough, the business's customers and their customers may have limited finances, customers may be willing to increase slow payments and employees subject to financial difficulties fraud may be tempted to commit fraud and theft from their employers. It is suggested therefore the reading of this article may be of value as you plan your future business strategies.

Norm Grill: How to make accounts receivable pay off

Norman Grill

12 Jun 2018

If you sell goods and services on credit, you must ensure your customers pay your invoices within agreed terms. Unfortunately, not all customers pay promptly within agreed terms.

No longer can a business afford to have invoices which should have been paid, sitting in the Debtors Ledger waiting until the customer decides to pay. A proactive mind-set and proven strategies are required to ensure you get paid in a timely manner. As cash is the lifeblood of your business, it does not help to have your cash sitting in your customer's bank account.

Norm Grill's article provides information about developing the right mindset and strategies to assist with getting unpaid invoices paid more quickly. If you need help in developing the mindset and strategies to get your outstanding invoices paid, this article may be of value.

Contract Terms that Stop Payment Problems

Dean Kaplan

26 Apr 2018

Ask any credit management professional, debt collector or lawyer collecting a debt or trying to manage a dispute, what are the most important aspects of success?

Without doubt, their answer will include a properly prepared and signed credit or trading contract, plus supporting documentation.

Dean Kaplan, an experienced debt collector from the US has written a blog on these aspects.

Another important aspect is that properly prepared contracts and good paper trails also provide excellent evidence for purchase and sales fraud investigations.

If you are starting up a new business, reviewing your credit or trading contracts, or need to be convinced on the importance of good contracts and documentation trails, this blog may be of value.

Time for ‘prudence’ to make a come-back?

Alistair Kay

24 Nov 2017

Consumer debt is on the rise globally and this situation has potentially negative implications for all businesses.

Alister Kay's article, originating in the UK, could well be written by an author from any country today as the basics are similar.

The focus of the article is about a change in lending practices of the banks and finance companies which offer consumer finance products. However, this article is also a sign that organisations offering B2B credit to their customers, would be wise to rethink their own lending practices. Yesterday's lending practices in both the consumer and B2B worlds, are often no longer applicable or practical.

This article may be of value therefore, if you are looking for the clues that would encourage you to review your own lending practices to meet the future business environment.

Growing threat to lenders: Synthetic identities

Hannah Lutz

26 Oct 2017

One of the fastest growing type of identity theft, synthetic identity fraud in the auto finance industry in the US, is on the rise according to Hannah Lutz. In reality, synthetic fraud is occurring in every industry and to some extent, in many professions.

Ms Lutz explains how synthetic identity fraud takes place in the US. However, fraudsters operate similarly in every jurisdiction.

If you wish to know more about synthetic identity in order to improve the identity checks in your industry, Hannah Lutz's article could be worth reading as a starting point.

The Consequences of Inadequate Due Diligence

Austeja Kibildyte

21 Oct 2017

Many business people are encouraged to consider exporting as a way of increasing their sales. This is a fine thought. Unfortunately, whilst being encouraged to consider the positives of exporting, rarely are business people properly cautioned about the associated risks.

Austeja Kibildyte's article introduces a number of risks which a potential exporter would be wise to consider.

If you are interested in exporting, now would be would be a good time to explore both the positive and negative aspects of exporting. It is very easy to spend a lot of time, energy and money and wish you knew what was involved if your exporting ventures turn nasty. This article may be of value to help you come to grips with a number of the issues when exporting and help you minimise any adverse consequences.

 

Many ways that employees steal

Martha Myron

8 Oct 2017

Martha Myron's article is a timely reminder about an issue many business people would rather not consider, the enemy or fraudster within their business. Unfortunately, it is a sad fact, not all your employees will add value to the business. Incidentally, we are talking about all employees within the business, including those in management.

As you read the article and start to think about the implications, it soon becomes obvious, that all businesses can be negatively affected if the wrong employee is employed. How do you try and employ the right type employees to avoid such stealing from happening in your business? That is a question which is for another time, but certainly worth exploring.

If you would rather not think about your employees stealing from your business, sadly this head in the sand concept could well cost you badly. Now is great time to consider this issue if you have been avoiding the issue and reading Martha Myron's article could well be worth reading as a starting point.

What An Experience

Paul McCarthy

26 Sep 2017

Too often, business people only think about marketing their business when selling goods and services. If you only market one part of your business and not the business as a whole, it is similar to somebody dressing professionally from the waist up and if they are on holiday from the waist down. It is not a good image.

The marketing of your credit, accounts receivable and payable management as professionally operated and an asset to your business is worth dollars in the bank. Too many business people however, fail to see the importance of these areas to also reflect a positive holistic image of their business.

Paul MCCarthy's article is worth reading from too perspectives. The first is to create a test to verify the image perceived by suppliers and customers of your business. Every business needs suppliers and customers to survive and grow. Second, if your test suggests your business could do better, this article is a useful guide on how to improve your business's image.

Australia Leader Sites Corporate Extortion of Small Suppliers

David Gustin

27 Jun 2017

David Gustin has highlighted an article which appeared in the Age newspaper from Australia. We can take two important messages from David's article.

The first is, although David is based in the US, he has thought the value of this article from Australia is important for all businesses, no matter which country they operate.

Secondly, he has reinforced the issue which smaller businesses have when supplying large corporate enterprises. All too often, the smaller business is attracted by the prospect of supplying a corporate client. Once the relationship commences, the smaller business soon finds it can be at a disadvantage when it comes to enforcing their payment terms and conditions if the larger corporate "suddenly" changes those terms and conditions. 

These messages are of importance to all business people and professionals irrespective of what country they operate. I suggest therefore, this article is worth reading if you intend to supply large corporate enterprises.

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