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What's New At Credit Matters?

What's New At Credit Matters?

A new feature is on the way to start to 2020.It was not quite ready for this newsletter unfortunately. All things being equal, we hope it will be available within the next two weeks.

There will be no February newsletter due to a perfect storm of family and other events all happening during February. However, if time permits, there might be a blog or an essential reading article added to the website.

Due to time pressures which we are all under at this time of year, there are no brochures with this newsletter. Nevertheless, there are always opportunities to advertise with Credit Matters at a very affordable rate. You can contact Kim at for our interesting options.

All the best for 2020, may it be a profitable year for all

Quote Of The Month

Quote Of The Month

“Facts are stubborn things, but statistics are pliable.”
― Mark Twain

Monthly Business Observation

Monthly Business Observation

Identifying the difference between facts and statistics is an essential requirement for all business people and managers.

As Mark Twain articulated, facts are stubborn things, statistics are pliable. At the end of the day, facts are irrefutable, for instance the bank balance. Now that’s a fact!

Statistics on the other hand can be manipulated or ignored according to the bias and needs of the creator or viewer. For instance, many business reports can be manipulated to produce a picture that the person preparing the report wants others to see. Usually you will find that the picture is of no value for the well-being of the business or bears little resemblance to reality.

Customer contacts are one report that can be easily manipulated by sales and customer service employees. These reports purport to show a number of different variables such as effective contacts and happy customers verses ineffective contacts and unhappy customers etc. Often, as Australian banks found out, the information in their customer service reports was not only useless, It was also damaging to the bank. Furthermore, the information failed to provide an accurate picture of the Banks success in handling real problems.

In collection or accounts receivable operations, timing of contacts and content of messages with debtors may lead to an expectation that the employees have worked to instructions. On closer inspection however, it is usually found that the employees have worked the system to produce a result that suits the needs of the employee.

In another example, many employees, and managers, now seem afraid to pick up the phone and actually speak with debtors. To avoid any confrontation or uncomfortable discussions, the employee only has to make contact at the wrong time of day or when they suspect their contact is unlikely to be available. Such contacts provide the employee with the numbers they need to meet their KPIs.

If not properly managed, the Debtors Ledger can also provide an incorrect figure. It is not hard to manipulate the figures to produce an image of a well-managed Debtors Ledger that fools management because it produces a picture of well-being. Unfortunately, when the CFO or accountant goes looking for cash to pay creditors, the cash which is actually available is often nothing like what was projected in management reports.

Interestingly enough, a Debtors Ledger where the actual figures are out of balance, is rarely the result of manipulation by a biased employee. An out of balance Debtors Ledger is usually the result of an inexperienced, or unprofessional employee doing what they think is correct when allocating payments. Again, it is not until closer inspection it is found they have actually allocated payments incorrectly.

Amongst the weaknesses in many businesses today, is the reliance on less experienced employees, poor implementation of technology and being less aware of how to operate and manage a business. There is nothing simple in business today and each new customer or supplier interaction has the potential to add another level of complexity not anticipated.

It is wise therefore to understand the difference between facts and statistics, because there is a world of difference.

Monthly Business Conundrum

The fact is that most businesses do not have the time to do everything that is required, or the money to be effective all the time. The cost ramifications when making mistakes or not having enough time to do things correctly the first time, are therefore very expensive.

No more do we see the loss of time and money brought about by inefficiency within the rest of the business than in the credit and accounts receivable management. In fact, we can often see how effective our business is when reviewing the contents of Debtors Ledger.

If the Debtors Ledger is in good shape, then we have an indicator that the business may be operating satisfactorily. I say may be in good shape, because when accounts receivable is being managed by inexperienced and non-professional employees, they have a tendency to allocate payments to the oldest invoices. In addition, if there is no emphasis throughout the business to eliminate mistakes and process customer deductions promptly, the true value of the outstanding invoices will be compromised. In such situations, the Debtors Ledger will not be an effective indicator of the business’s wellness.

When inexperienced employees are allocating payments incorrectly or there is no emphasis on eliminating mistakes, a great deal of time can be spent following up uncollectable invoices. In turn, this means there will be less time to work on the outstanding collectable invoices. In time, particularly in a business downturn, these collectable invoices can become uncollectable.

Monthly Business Conundrum
Business Red Flags

Business Red Flags

The first order from a new potential customer which has to be supplied in a hurry is a situation all businesses will encounter from time to time. The issue at stake is; will it lead to a new profitable customer or a nightmare of costly problems?

Being able to supply the first order for a new customer is a wonderful opportunity to showcase the value of your business to a new customer and perhaps lead to a profitable trading relationship.

The first order needed in a hurry is also one the favourite strategies of a slow paying customer or fraudster. There are two ways these customers get away with this strategy and it usually comes down to a lack of business discipline and due diligence by naïve or desperate business owners, managers and salespeople.

The first strategy is to pay the first, second or next few invoices quickly as a way of establishing the bona fides of a “good customer”. Depending on the rigor of your prior due diligence processes, you will quickly identify any payment or action variance when they start slow paying the following invoices and take suitable action. Hopefully you will be able to stem losses from this point.

If your business processes and disciplines are weak or non-existent however, the order will usually be accepted and supplied. Then you will probably find the slow-paying customer has sucked you in to a long term relationship of slow payments and reduced profits. After all, it is hard to tell a customer to leave if they keep buying, even if they pay slowly.

The fraudster on the other hand, will probably not pay any invoices once they have what they want. In that case, the business is left with a costly bad debt.

Word Of The Month

Is the spelling barbeque or barbecue?

Australia Day is a day to relax and have friends over for a barbeque, or is that barbecue?

A search using Google for sites ending in .au, returns around 3.7 million results for barbeque and 17.3 million results for barbecue. Microsoft Word allows both barbecue and barbeque as valid spellings

The Oxford and Macquarie dictionaries list barbecue as the primary spelling and barbeque as a secondary spelling. The Macquarie dictionary notes there’s greater use of the secondary spelling barbeque in Australia, than there is in the US or UK.

The preferred spelling in Australia is barbecue. Now there’s something to ponder whilst grilling the snags on Australia Day. 

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.