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What's New At Credit Matters?

What's New At Credit Matters?

Our new features are not quite ready yet despite our efforts. Hopefully you will see further interesting features in he months ahead.

Meanwhile we are pleased to announce that Jan Reeeves is a first winner of the Red Flag Comptition - Challenge. You can read her contribution later in this newsletter. Well done to Jan.

The attached brochures this month are focused on learning more in these troublesome times. First is dealing with debtors by CreditorWatch, a brochure on what a criminal looks like, Jan Reeves book on getting paid, all about our Red Flag Competiton - Challenge and identfying what is bugging you in business.

If you would like to advertise at a very affordable rate, comntact Kim on to see what we can do for you.

Quote Of The Month

Quote Of The Month

When major declines occur, however, they offer extraordinary opportunities to those who are not handicapped by debt.

Warren Buffett

Monthly Business Observation

Monthly Business Observation

Debt whether it be owed, or owing to you, is one of the greatest impediments to survival in troubled times. Whilst Warren Buffet’s quote is focused on debt owed by the debtor, there are many issues also applicable to the creditor. In troubled times, no one is safe from the issues of debt.

Debt owed is money your business has not yet earned or received and needs to be repaid, plus interest. There is also no guarantee that there will be money available to pay your debt when required, even in good times. In tough times when sales are falling and margins are tight, there is even less certainty you will have the necessary funds to pay your debts as they fall due. Even if you can hold off paying your debt repayments as they become due for a short period, usually a higher rate of interest becomes payable as a penalty.

Even if you can manage your business’s cashflow to meet existing debt commitments, the money required for debt repayments is not available to take advantage of other opportunities. Let us not forget, some of the best buying and profit enabling occur during troubled times. For instance;

  • a desperate supplier unexpectedly offers settlement discount to pay an account early;

  • business supplies or new stock is offered from an insolvency administration at a large discount;

  • machinery or motor vehicles become available at a great discount;

  • an opportunity to purchase land and buildings becomes available so your business can now own its operating premised rather than rent, etc.

These types of opportunities always materialise in downturns and can set your business up for the future. They are unobtainable however if you don’t have the cash because you have to pay off debt. Furthermore, going into debt to buy them in these times is not always the best option either.

Monthly Business Conundrum

One of the issues when operating a business, is to try and minimise costs without losing business or profits.

Unfortunately, too many businesses lose more money than they save money because they operate short-staffed. This situation occurs due to an out-of-date or deficient business model, a lack of awareness of how money is lost, or a failure to understand and measure the costs of inefficiency and mistakes.

As in all things, there is a break-even point when costs lost through inefficiencies exceed the costs of employing additional people. However, if you don’t measure losses caused by mistakes or inefficiencies, then you cannot begin to understand or calculate the break-even point for your business.

Operating a successful business is much more than just managing costs. It also involves maximising profits by eliminating inefficiencies which create costs which do not enhance the value of the business.

Monthly Business Conundrum
Business Red Flags

Business Red Flags

It is interesting to see how few businesses, particularly amongst the largest corporates, no longer reconcile their debtor and creditor ledgers these days. For some reason, financial managers no longer believe it is necessary, or they can save costs by not reconciling these accounts.

Interesting, after nearly 40 years in business dealing specifically with debtors and suppliers, I find such thinking interesting to say the least. After all, to my knowledge, there are no studies advising whether or not reconciling these accounts is NOT cost effective.

From my personal experience, I believe the cost of employing just one extra person in receivables and another in payables will be more than paid for to prevent money being sent incorrectly. In fact, many years ago according to a story I heard, an unemployed credit manager offered to reconcile a large business’s accounts for free. All he wanted was 10 per cent of the funds he identified as being paid incorrectly.

The outcome of this offer was his contract was withdrawn three months later because he made more money than a standard accounts employee and senior management was embarrassed.

His experience was no different than my own, only I have never been allowed to keep the 10 per-cent of the incorrect payments discovered.

When a business reconciles its cheque book and bank account but not its receivables and payables you need to ask the questions of: “what do we actually save by not reconciling and who manages our incorrect payments received and paid?”

Business Red Flags Winner

Business Red Flags Winner

When you contact customer about not sticking to specifically agreed payment terms they become rude and aggressive.

This situation usually indicates the debtor is under stress because they either physically don’t have the funds, or they are untruthful in business dealings. This situation is another business red flag and indicates you will probably be paid late or not at all.

By Jan Reeves

Word Of The Month

Is the spelling checkbook, check book, check-book, chequebook, cheque book or cheque-book?

It’s been a long time since I’ve written a cheque. Remember ripping out those cheques. But how do you spell the thing you ripped the cheques out off?

The easy part is we can eliminate checkbook (and any variation) as checkbook is listed in the Macquarie Dictionary as the US spelling. The Australian Oxford dictionary lists cheque book and the hyphenated variation as in cheque-book journalism. The Macquarie Dictionary has the entry chequebook and chequebook journalism. Two dictionaries with two different spelling variations.

If we perform a search on the NAB, Westpac, Commbank and ANZ sites, our four main banks nearly always use cheque book.

A search of Google restricting sites those ending in .au for cheque book and chequebook gives  36,00 and 31,900 respectively. Using the plural cheque books and chequebooks gives 12,000 and 6,320 respectively. If we search for cheque book journalism and chequebook journalism the results returned are 508 and 74 respectively. Of the 508 results for cheque book journalism around 30% used the hyphen, as in cheque-book journalism. Finally, if we use chequebook diplomacy and cheque book diplomacy we get 70 results and 44 results respectively.

Certainly this is not an easy one. The banking industry appears to mostly use cheque book as two words. The results returned from Google for sites ending in .au also indicates cheque book is the preferred spelling. When used as an adjective with the word journalism, the most common usage was cheque book without the hyphen.

Based on these results, for Australian usage, the preferred spelling appears to be cheque book as two words and when used as an adjective, the spelling may not need to be hyphenated. Although this does make me wonder if it’s because using hyphens is often a problem for people. Normally, going forward we’d probably expect to see chequebook become the preferred spelling, however since cheque books are being used less and less, there’s a good chance cheque books may become a thing of the past.

Word Of The Month

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Credit Matters is a financial risk management resource centre for the Australian business community. If you are in business, Credit Matters is your ideal source of financial risk management solutions.

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Future Opportunities & Possibilities

Credit Matters is continuing to grow and provide marketing and knowledge about financial risks to the Australia business community.

Futhermore, we invite marketing and knowledge ideas from our readers and contributors on how we can assist our respective firms grow. If you have any ideas, please contact me at

If you are interested in finding new ways to reach your marketplace, why not try Credit Matters. Our prices for advertising are very reasonable and advertising packages are on offer to make any cost, even more affordable. So if you are interested in reaching your customers at the right price, please contact Kim at for options.