Credit Matters

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Credit Matters
What's New At Credit Matters?

What's New At Credit Matters?

At last, we have our new newsletter format ready. We hope you like this new version.

By the way, do not forget, an audio version of each newsletter is available about a week after the email version.

There are always advertising opportunities for those businesses working in the B2B financial risk management area. We are always focused on helping people become better business people by providing information on business risks. If you are interested in advertising, please contact Kim on kim@creditmatters.com.au or via telephone for a no obligation discussion on possibilities.

This month we are featuring brochures from Investor Upgrade, Jan Reeves, CreditorWatch and FinTech Australia/ASBFEO/Bank Doctor, . If you would like to have your advertising brochure attached and mentioned in our newsletter, contact kim@creditmatters.com.au for a no obligation chat on possibilities.

Quote Of The Month

Quote Of The Month

Western society would do well to remember the wisdom of Ayn Rand (author of Atlas Shrugged): ‘You can avoid reality, but you cannot avoid the consequences of avoiding reality.’

Monthly Business Observation

Monthly Business Observation

Avoidance of reality is all too often a large part of business failure, or failing to maximise your business opportunities.

Nowhere do we see this situation occur more often than when we review the credit management and accounts receivable functions. A good example is when credit managers complete their due diligence on a new customer and advise against taking on the potential customer.

The credit manager achieves no kudos for rejecting every customer where there are a few potential flaws which may lead to a loss. When the credit manager does see a situation fraught with danger and declines a customer's application for credit, they are often overruled by senior management and salespeople. The fact is, in these situations the credit manager has discovered a number of negative issues with few benefits for doing business on credit with that customer. Meanwhile, senior management and salespeople only see a sale and personal rewards.

Likewise when accounts receivable employees note a reduction in a customer's payments and points out there is also a decline in cooperation from the customer. Again, their observations and concerns can be marginalised or ignored by management and salespeople who are afraid they may offend a customer.

The introduction of the PPSA (Personal Properties Security Act) here in Australia was another perfect example. Senior management in a number of companies refused to accept the benefits of the new legislation. As a result, they would not spend the money to protect their assets, or thought the new legislation was just another passing fad. Unfortunately, many of these senior managers found out all too late that their businesses lost many thousands of dollars unnecessarily when their customers became insolvent.

The same situation occurs when a large-dollar valued customer is slow to pay. Instead of fronting the situation when the payments first slow down, or there are visible signs of ineffective business processes, management and sales actively avoid taking action. At times, they will even avoid picking up the telephone and talking with the customer about these issues. Aa a result, many dollars are lost by these avoidance actions. In the end, much more extra work has to be completed to try and restore the relationship or repair the cashflow deficiencies and expense overruns which could have been avoided if contact had been made.

Risk management and due diligence issues are other areas of the business which are also often overlooked because of management short-sightedness and avoidance of the potential damage. Too often, management is willing to take a risk rather than spend money. A good example is the discovery of fraud and the loss of many dollars because management avoided the possibility of fraud occurring.

At the end of day, avoidance practices in relation to managing risks within the business environment, is one the leading causes of why businesses fail or lose money.

Monthly Business Conundrum

One of the most important aspects of business, is to get paid as quickly as possible. The first part of this process is to deliver your goods and services as ordered by the customer. Secondly, you must raise and forward the invoice, again as advised by the customer.

Having completed these tasks, you need to monitor for the receipt of the payment. If the payment is not received within terms, you must contact the customer as soon as possible.

Some business owners, salespeople and fee earners, are afraid to contact the customer in case the customer is offended. The fact is, it is better to take that risk rather than not pay your own suppliers of finance providers in a timely manner. When your suppliers and finance providers become offended, they can do far more damage to your business than a "precious" customer.

Following up on unpaid invoices is a normal part of business. No sensible customer will be offended if you approach them in a reasonable and professional manner.

Your conundrum is to understand the ramifications of not contacting customers for unpaid invoices versus the potential of being scared of your customer's response.

Monthly Business Conundrum
This Month's Business Inconvenient Truth

This Month's Business Inconvenient Truth

When in business, you will always make some bad decisions. It is simply unavoidable and comes with the territory of owning or managing a business. The secret in business is to avoid making too many bad decisions and learning from those that are made before they prove fatal for your business. Some of the worst mistakes can easily be avoided simply by listening to experienced businesspeople and in applying a little common sense.

In order to avoid making as many other mistakes as possible, it is wise to take heed of the lessons of history. In addition, you can look to employ risk management professionals which understand the worst mistakes of other businesspeople.  A few simple bad decisions for example include, failing to complete due diligence on new customers, employing unqualified employees, failing to make contact for unpaid invoices, etc.

If you can avoid making bad decisions which are known to others and for which there are many examples, this goes a long way towards helping your business survive and grow.

Word Of The Month

Is the spelling Labor or Labour?

There’s considerable rejection against the use of American spelling in Australia. We’ve caved on some words, but our Australian English is often different to UK and American spelling.

 

 Every few years at election time, one thing that stands out is the incorrect spelling of the Australian Labor Party. Yes our leaders use the incorrect spelling for Australian usage, but most people find little issue in the usage. If a student used the same spelling in a spelling test, they’d be marked wrong. 

 

The reason the Australian Labor Party use the spelling Labor instead of Labour, is, in the early 1900s there was a push towards using American spelling and a remnant of that time, is the spelling of Labor in the Australian Labor Party’s name. Rather than get hung up on spelling that ideally should be changed for consistency, if it makes things easier, it’s perhaps better to think of this as branding. In branding, incorrect spelling variations are often used.

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 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.