Credit Matters Newsletters

Our Professional Bodies category is now on the Home Page. We believe it is more appropriate to have this group of organisations outside of the Better Business Club.

Advertising via Credit Matters

If you are interested in reaching a wider group of business prospects, contact Kim to see what we can do for you. There are many different opportunities to advertise your business. However Credit Matters offers one of the few opportunities to reach a broad marketplace of customers with financial risk management requirements.

This month, we have attached a flyer on the National Achiever 2105 Award won by DRA. This is a fantastic reward for their business. We have also attached their Flyer advertising their services. In addition, Investor Upgrade and (creditor)watch flyers are attached.

Historically, we have become used to the factors of business being awarded classification terms by those before us. These classification terms are used to provide a meaning by which we can all use to understand and to measure the activities of a business.

The problem we have with historical business terms of classification is that we may become so use to these them we fail to appreciate what they mean in a critical sense.

For example, accountants call an invoice outstanding in the Debtors Ledger a current asset. Based on this classification over the years, we assume all invoices in the Debtors Ledger must be assets.

Unfortunately the truth is that an invoice may be a liability to the firm. However it can be difficult for some people to grasp the idea of how an invoice can be a liability because of the traditional classification.

If you cannot quantify whether the invoices listed in your Debtors Ledger are assets or a liabilities, then the value of your Debtor's Ledger is compromised. Whether this difference is of a material value, only a reconciliation of the accounts will prove that point.

Your conundrum therefore is as follows. Do you rely on historical financial classification terms or do you seek to understand whether these historical terms provide a true picture of your business's financial situation?

Neil Slonim's advice that banks are not your business partner is so true. The banks make a lot of noise in their advertisements about how they make a good business partner. Unfortunately their business practices don't usually match their advertisements.

However this is not another bank bashing blog. The point I wish to make is; your bank may not be the best business partner or source of business funds. Furthermore, there may be a better use of the funds in your bank account rather than just leaving them there to accumulate and to perhaps earn a bit of interest.

Consequently there are a number of business factors and ideas which I have put forward for your consideration.

Money held in banks today, although safe, offers a very poor return, i.e. the interest rates offered on deposits are minimal. Bank finance can be expensive and time consuming to obtain. In addition, if the banks consider you are not worth the effort of supporting through tough times, they can take action which damages or leads to the demise of your business.

Apart from the banks, other economic and business behaviour factors need to be considered. For instance, according to media stories, business people and larger corporations are holding on to their cash. We also know debt collection is often expensive and can be ineffective. Unfortunately it appears customers which do not want to pay, seem to get away with it all too easily. In regards to future business prospects, there is evidence the current low growth business environment will persist both locally and globally.

So what are the options for the average business person with a few dollars these days? There are always risky personal investments of course. Then there are equally risky business options such as buying a competitor or branching out in to another business category. Unfortunately, such options, all too frequently do not go to plan.

If it appears the general business environment is going to be patchy for some time yet, as predicted, only a strong business will survive. Rather than fund a risky venture in such circumstances, why not invest in creating a more resilient business?

To create a more resilient business, here are a few options for your consideration.

1  Re-engaging with your customers to ascertain whether (i) there are any new business options, (ii) new operating efficiencies can be found or (iii) the same owners still operate the business.

2  Review and upgrade your marketing materials and efforts.

3  Complete due diligence and profitable trading exercises on your customer accounts as applicable.

4  Review your own business operations to ascertain whether there is a backlog of unanswered enquiries from suppliers and customers.

5  If any backlog of work is found, or additional work is required to operate more efficiently, employ temporary staff to bring the business back in to a more efficient operating mode.

6  Review and upgrade your firm's assets of production and IT capabilities to be more productive.

7  Provide extra staff training to ensure they are aware of up-to-date developments relevant to their work.

8  Provide "thank you" rewards to reinvigorate your employees' commitment to the business.

9  Explore new product and service options which might compliment your existing business expertise.

10  Pay your creditors to redeem a poor payment history, or ask for a discount to pay your accounts earlier than normal.

You may be able to identify other ways of strengthening your business. The main concept of any investment or in the use of borrowed funds should be to add value. By building a stronger and more resilient business, your business has a better chance of survival. The investment in your business make also make more money rather than backing risky propositions in which you have little expertise.

A risky investment or poor use of funds may quickly lose all your wealth and hopes for the future. A strong and viable business on the other hand, offers an opportunity to grow your wealth and protect your future well-being.