Credit Matters Newsletter
In This Issue
- What's New At Credit Matters?
- Quote Of The Month
- Monthly Business Observation
- Monthly Business Conundrum
- This Month's Business Inconvenient Truth
- Tradies Hint and Notes
- Latest Blogs & Readings
- Special Topic
What's New At Credit Matters?
Welcome to our August newsletter. This month we review a number of business topics to assist your business to stay viable and grow.
This month’s quote and blog focus on the negative issues you face in business transactions with family and friends.
The conundrum this month asks whether AI will really benefit your business, or be a costly exercise if applied without due regard to all the other aspects of your business?
Our inconvenient truth is that cashflow and profits are essential for business survival. Too many businesspeople however, fail to maximise the opportunities that would increase cashflow and profits for their business.
This month’s Tradies Hints and Notes focuses on ensuring tradies are paid properly by their customers.
The Special Topic asks, “With the reduced interest rates announced by the RBA, have you considered how this will affect your customers?”
Kim is available to help with your questions and concerns if you need any assistance, and as always, the first chat is always free of charge or obligation.
Quote Of The Month
Jack Ma on Sales: 'When doing Sales, the first people who will trust you will be Strangers, Friends will be shielding against you, fair-weather friends will distance from you. Family will look down upon you.'
Monthly Business Observation
If we look at the behaviour of many friends and families, we often see the best and worst of their actions when money is involved. The best friends and family members are fantastic and will stick by you through thick and thin. The worst ones are those that will steal from the family or from their business friends.
In the case of family members behaving badly, we see such examples as elder abuse, or when grandparents and parents leave money behind in envelopes for each family member. We have all heard the stories that when the family member has died, suddenly there are no envelopes with money. What has happened is that one or more family members have gone through the house first and stolen all the envelops with money.
We have also seen the awful example when some family members who have had little or no contact, or have abused the deceased in the past, suddenly sue the estate for a greater share of the estate then the deceased had nominated for them.
In the case of a business, friends and family members equally believe that it doesn’t hurt to steal from their business friends because it is just business, or they believe the business can afford the loss because they can write it off as a tax deduction.
In both of the above situations, it is a clear case of theft. When you add the emotional costs on top of the financial cost, dealing with family members and friends can be a really costly exercise. Taking care to be paid for your goods and services therefore must be completed with the same care as you would use with a dodgy or unknown customer.
Monthly Business Conundrum
AI is here to stay and there’s no doubt that it can be an effective tool for many aspects of your business. It will however, have the potential to negatively affect your business in unforeseen ways if due diligence is not taken seriously.
A tool of any sort used incorrectly or not applied to the wrong task can cause immense damage. The same will go for AI, as we have already seen in many situations. It also goes without saying, when difficulties emerge between your business and its stakeholders, it can cause other problems, many of which have already been highlighted in the media and professional publications.
If you wish to use AI properly in business as a valuable operational asset, rather than an operational and reputational liability, care is required. AI after all, cannot deliver a message in the same way a human employee or manager can, and your stakeholder organisations’ decision-makers are human.
One interesting observation already exposed is that major technology businesses which are now using AI, are retrenching or sacking many of their employees. This action is a strange reaction when you consider that the owners of these businesses were once the great disrupters and entrepreneurs of their fields. It seems that they are now incapable of this thinking as they once did. If they did, perhaps they could have used many of these employees whom they already know and trust, to investigate other business possibilities using AI.
Worse still, many of these employees will then take their skill sets to other organisations, or perhaps set up businesses in competition to their former employers using AI and the knowledge they already have in these industries.
At the end of the day, AI is just a business tool. If you don’t have the managers and employees who understand how to use AI properly, then your business is operating with the potential of many negative factors. Today, reputation and service reliability are everything. If the use of AI causes problems that could harm your business’s future prospects and reputation, then it is not a business tool that is of value to your business.
This Month's Business Inconvenient Truth
Operating a business requires understanding the importance of two really essential factors, cashflow and profits. It is simply amazing the number of businesspeople who never come to grips with the importance of these two factors as proven by their inaction to maximise the growth of their cashflow and profits.
The problem many businesspeople face regarding profitable sales and cashflow, is to find the right price for their goods at which the customer is willing pay, whilst ensuring there is enough profit from sales to cover current and future expenses.
Another problem you have is properly managing expenses to match the cashflow and profits received from sales and that will cover your expenses. The main threats to cashflow and profits that cause an increase in expenses include:
- inadequate sales documentation and missing terms and conditions,
- extending credit to slow-paying or dishonest customers instead of offering upfront payment incentives,
- sending out invoices to the wrong address, person or without a purchase order or other identifying details that authorised the sale,
- failing to answer customer enquiries quickly as possible,
- failing to stop quickly the causes of repeated credit claims,
- not following up outstanding invoices promptly,
- not reviewing the whole trading arrangement with customers to ensure you have a profitable trading relationship with each customer,
- employing salespeople with inappropriate selling incentives and a lack of training,
- not employing and training professional credit and accounts receivable employees
- ignoring professional and detailed advice from credit and accounts receivable employees, even when that advice has proven to be correct, etc.
Each of these factors will affect your business’s opportunities to maximise cashflow and profits from customers.
This section is devoted to Tradies contemplating going out on their own, or currently working in their own business. It is a basic introduction on the key factors in running and successfully operating a business.
Each month there will be a helpful hint on important issues which they are likely to face in operating a business.
If the tradie needs further information, they can also purchase a PDF booklet for AUD$5.50 including GST via Credit Matters website. This booklet offers basic insights on various business matters written in easily understood English. It can be downloaded to their phone or tablet and carried on the job for immediate assistance in case they need help for an unusual situation.
When a tradie transfers from being an employee to starting their own business, they are often unprepared to deal with all the issues of being in business. One such issue is being paid properly by their customers. To assist you need a great payment strategy, a business contract suitable for every customer, and a positive and proactive attitude to discipline.
Latest Blogs & Readings
With the reduced interest rates announced by the RBA, have you considered how this will affect your customers?
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.
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 info@creditmatters.com.au.
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 info@creditmatters.com.au for options.