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.
20 Feb 2017
Understanding and managing your costs is essential if you are to make a profit in business. Despite the mantra that the "Customer is King", not all customers act like a good king. There are those customers which do a great detail deal of damage to you and your business.
As Steve Cartwright illustrates in this article, there are always costs to dealing with customers. The cost however, in dealing with unprofitable and difficult customers often grows exponentially above any potential benefit. Furthermore, as Mr Cartwright points out, the costs are just not financial. There are other costs involved including, emotional, respect and lost time which could be better spend on other projects.
If you are having problems with difficult customers, Steve Wright's article may be of value in addressing some of the issues you currently face and help you decide on how best to deal with your worst customers.
2 Feb 2017
Lovetts Lawyers from the UK, have prepared a blog about the importance of knowing who you are trading with when extending credit.
Irrespective of the fact that Lovetts are based in the UK, the message of this blog applies across any legal jurisdiction or in any country. Extending credit is not without risk and if you can reduce the risks, then this is a worthwhile objective.
You may be suffering from slow-payers and cannot identify the trading entity, or who had authority to sign the purchase order or trading documentation in order to take legal action to recover your debts. Maybe you suffered bad debts in the past, or alternatively you are setting up a new business.
If this is the case, or just want to take the next step in tightening up your trading documentation, then this blog maybe a good place to start the process.
26 Oct 2016
It seems nearly every government export department and trade professional are advocating exporting as a way for your business to increase sales and revenue. This may be the case for your business.
One of the core problems you will face if you decide to go down the export path, is risk. Too often the advocates of exporting, highlight the benefits and minimise the risks.
In this brief article by Leslie Stroh, there is a list of 10 risk factors to consider when exporting. You may have to access other sources of information to adequately equip you with an understanding of each factor. However, as a starting point, this article may be worth a read if you are interested in increasing your sales and revenue via exporting.
19 Oct 2016
Colm Healy and Karen Niven discuss a recent research project they conducted which tested the goal setting process for organisations. The ethos behind the goal setting within any business, is of extreme importance. In addition, the part culture plays within the organisation is another essential factor in the success or otherwise of the goal setting process.
The subject and of impact goal setting has on employee behaviour, is especially in today's business environment. All too often we see yet another well-known business or government organisation being caught out due to the unethical behaviour of its employees.
Goal setting is a valid and valuable part of the business process, it completed properly. If you get the process right, you can motivate your employees to achieve their targets which benefits all stakeholders. Get the process wrong, and there are big penalties which come in to that will impact on your business negatively.
If you are unsure of the importance in goal setting within your business, this article could be of value in helping you understand the process.
23 Sep 2016
Michael Griffith's article is focused on the value happy customers add to your business, particularly in the area of referrals and in providing positive comments on your business.
When you read Michael's strategies on how to keep your customers happy, you start to realise that these strategies are also important for your business in other ways.
Happy customers don't just refer others to your business. They are also more likely to pay on time, forgive occasional mistakes, and continue to make enquiries which you can utilise to improve your business processes. Equally important, they do not go online to berate your business for inefficiencies which damage your business's reputation.
If you have lost your way or had not realised the value of happy customers to your business, this article may be a good start to reinvigorating how you deal with your customers.
16 Sep 2016
Daniel Burrus has written about the increasing use of new payment methodologies in the coming years. He is probably right when he advises digital payment systems are going to be the norm for the future.
There are an immense number of issues which business people need to get their heads around, because as we know in life, nothing is simple. Whilst the use of digital transaction methodologies is attractive in theory, they do have associated risks. Accordingly, it is a wise business person who takes the time to understand the issues before blindly accepting digital payment policies are right for their business.
Daniel Burrus's article may be a good place to start if you are going down the digital payment path to try and ensure you understand all the benefits and pitfalls of modern digital payment methodologies.
31 Jul 2016
BHS was a UK retailer with a history going back 88 years. Recently the retailer was put in to Insolvency Administration with massive debts.
This article is not just a story about the value of good credit management practices, many valuable other business factors are illustrated. The business issues raised are (i) the impact on your business when a major customer goes out of business, (ii) the flow-on effects to other businesses, (iii) the cost of trying to find additional sales to replace the losses just suffered and (iv) the importance of not seeking just one or two major customers.
I suggest the value of this article lies in the many business messages of loss which can be suffered when a major customer goes out of business.
20 Jun 2016
Chris Hayes writes about one of the forgotten tools of credit management; the personnel guarantee.
His comment on what many people say, “… personal guarantees aren't worth the paper they're written on” is based on a myth from “the good old days". This myth come about because many creditors failed to validate the worth of the security supporting the personal guarantee.
A personal loan is no different to taking any other form of security. If you aren't prepared to do the work to validate the security or to understand the nature of the security, then of course the security may be worthless. Notwithstanding all the work which is required to ensure that it is worthwhile accepting a personal guarantee, the guarantee is still a valuable credit tool.
If you now think is time to revisit the use of a personal guarantee as security, this article may be worth a read as a starting point for your investigations.
27 May 2016
Kim Niemi writes about one of the major disruptors in business, the customer experience. What are customers really looking for? We know one factor is the cheapest price. However, are there other factors which influence their decision making which you can use to influence their decision making positively?
Kim writes about what she considers to be the five most important factors. By focusing on these issues, she believes you are likely to attract more customers. Furthermore, I respectively suggest, by considering these issues properly with an open mind, you will also have a much better business organisation.
The five same issues which Kim writes about not only attract customers, they are also applicable when it comes to running a profitable business.
If you are failing to attract or keep your customers, this article may be a good place to start in rethinking how you do business.
6 Apr 2016
Graeme Skinner's blog is based on one of the oldest themes of business, “A sale is not a Sale until it’s paid for”
Your salespeople are often the first of your employees to see what is happening within your customer's business. Graeme provides indicators of the type of evidence which your salespeople might notice and could reveal the customer may be experiencing difficulties.
Any indications that a customer's business may have problems are valuable and are generally the warning signs that they may be struggling financially. It is imperative this information is provided to the credit department in order that can institute actions to reduce the level of any potential debt.
Your salespeople are part of your business's team which need to be trained to look for signs of your customers' well-being. It is of no value however, if the indicators of any problems are not reported to your credit team members.
If you need a starting point or a brief refresher on the importance of sales and credit working together, this article is a suitable source of this information.
21 Feb 2016
In the modern age, the customer who wants everything is the norm. For instance, those business people who sell on credit, usually find the customer believes they have the right to change the terms of trade or not pay at all.
The situation is exactly the same from the modern autonomous customer who approaches your business. They want everything their way. If you don't offer almost every interactive contact method known to man or woman, then your business may miss out. Despite adhering to their demands, there is still no guarantee they will transact any business with you.
As in all things to do with business, nothing is simple. Furthermore, the customer is not always right. As a consequence, if you believe you must comply with the autonomous customer's demands, then doing it right is essential.
This brief article, with an option to download a PDF white paper, may be of value if you decide your business must cater for the autonomous customer's every need.
7 Feb 2016
Marie Keyworth's introduces the unwary to two more fraudster strategies. People are becoming increasingly aware of phishing which is fraud by email. They may be less aware of newer fraudster strategies of vishing and smishing.
"Vishing" is where criminals persuade victims to hand over personal details or transfer money, over the telephone.
"Smishing" is SMS phishing where text messages are sent trying to encourage people to pay money out or click on suspicious links.
The author illustrates a number of strategies used by fraudsters in regards to these two frauds and how you might deal with a suspect contact.
If you are unsure how to act or what to look for when you receive a suspect contact, this article may be a good place to start your investigations. As advised on all occasions, if in doubt seek professional help.
22 Jan 2016
Ty Kiisel from the US explains the importance of keeping a good business credit rating as well as a personal rating. In Australia, the same situation exists for people who also are in business. Even in this day and age, many people do not understand that when in business, your creditors and potential creditors will seek to have the authority to access your consumer and personal business file, as well as that of your business.
When operating a business that relies on the good will and credit of other organisations, maintaining all your credit related files in good order is of critical importance. With a bad record in one file, this record could easily preclude you from credit facilities on the best terms and interest rate for your consumer and business needs.
Ty's article includes a number of valid reasons on why a good business credit rating is so important. If you were unsure on how to maintain a credit rating in all your accounts, this article may be worth reading.
11 Jan 2016
Dean Kaplan is an experienced business professional and debt collector from the US. In this article, Dean provides a number of red flag indicators which may indicate future cashflow problems for your customer.
These same indicators are observed and applicable within the business environment of any country. For instance, I suggest other experienced credit professionals, debt collectors and insolvency practitioners from all countries would have seen similar red flag indicators during their careers.
Dean points out there are other indicators which may be useful in specific situations which he has not detailed. Educating yourself to be on the alert for any unique red flag indicators which are applicable for your industry, is just as important.
A useful aspect of this article are the explanations which are included to illustrate the problems behind the red flag indicators.
In the turbulent business world of today, being aware of the indicators of customer cashflow problems is an essential component of business survival and to reduce unnecessary costs and bad debts.
If you are unaware or would like to refresh your knowledge of the red flag indicators of cashflow problems, this article may be of value to you.
10 Aug 2015
Business is its own art form. Amongst the tools an artful business person will use to collect their accounts from recalcitrant debtors, is legal action. Taking legal action can be expensive if used badly, just like any other business tool. Using legal action as it should be used is often the difference between making a profit or a loss.
I am not suggesting all debtors should be sued for all outstanding debts. Knowing how and when to take legal action is the important issue. If you always run from a contest at the legal action stage, then you are unlikely to come to grips with use of legal action. Furthermore, and inevitably, you will continue to lose money unnecessarily.
In my experience, the business people who know how to use legal action properly are generally good business artists. I also believe they operate more profitable businesses over the long term, than the business person who is always afraid to take legal action.
If you are unsure of what I mean, reading this article is a good place to start when thinking about legal action. The writer has declared their vested interest in this subject and his desire that more business people consider taking legal action if appropriate. However that should not distract you from looking at some of the more positive reasons why, on the right occasions, legal action is effective.
4 Aug 2015
Trade credit insurance is a form of protection against the losses which may result from dealing with slow-paying and financially challenged customers. Whether it is a viable proposition for your business, is another matter. Nevertheless, it is worth considering whether trade credit insurance should be part of your risk management policy.
Many business owners and managers unfortunately have a misguided view of how trade credit insurance operates. Consequently there can be issues between the expectations of policyholders and the actual workings of the insurance policy. Like all insurance policies, there are requirements and responsibilities which must be met by prospective policyholders before the insurance policy becomes valid.
If you are unsure about trade credit insurance, and would like a general introduction, this article may be a good place to start. As always, you should seek professional help when in doubt.
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.
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!"
7 Jun 2015
Thank you is so easy to say and the effect lingers long after it is expressed in gratitude. However many people forget to say thank you.
We live in a fast paced world, crowded with people, noise, and information. Therefore how do we stand out in such a world so that people want to do business with you? Saying thank you is one of the few actions we can take and costs so little.
Jeffrey Slater provides a nice story on the value of saying thank you through his story.
If you have forgotten how to say thank you, why not read Jeffrey's article and try it yourself?
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.
If you are a specialist supplier of financial risk management products and services, then you need to be listed in Credit Matters Better Business Club.Read More