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What's New At Credit Matters?

What's New At Credit Matters?

Unfortunately, the development of our new website has been held up again by factors beyond my control. Hopefully, the new website will be available by mid-June, fingers crossed.

The attachments with this newsletter include an update from the Australian Small Business and Family Enterprise Ombudsman plus a flyer from Skip Schiphorst about researching the Chinese Corporate world. 

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

Quote Of The Month

“States are built with hardware, but nations are built on software.”

Simon Schama, “Putin should have taken a leaf out of Tolstoy’s book.” Financial Times 7/3/2022

Monthly Business Observation

Monthly Business Observation

Note:   Software in Tolstoy’s time did not refer to computers, rather to the human brain’s ability of human logic and computational capabilities. Wetware is a relatively modern term to try and compare a human brain’s capabilities compared to a computer’s software.

The relevance of this month’s quote, which must never be forgotten is that your business is at war with survival as the first objective. Once you know your business can survive, you then seek to win the war by being profitable.

As has been articulated over the centuries, in war you need the best hardware and processes and the best generals and soldiers to manage the software side of army to win the war. It is no different when your business fights in the war for survival and to win profits. In a business sense your business is in a war against competitors, fraudulent and slow paying customers, bad suppliers, plus governments and bureaucratic interference as shown in the COVID period. In addition, there are societal demands by many who will never buy from your business yet demand you obey their wishes for all sort of non-business issues.

Winning the software (wetware) side of the business war, as any marketing professional will tell you, is all about making your business stand out from its competition. The objective is to win the hearts and minds of your existing and potential customers to encourage them to buy from your business and not your competitors.

The wetware side of the business is therefore the input by owners, managers and employees who understand the nuances of doing business. In other words, a business needs to offer the communication methodologies, buying and payment options, type(s) of products and other processes which encourages all customers to buy its good and services.

Too often today we see this lack of understanding in our banks and larger businesses. In these institutions, we see the customer is forced by various means to work within the dictates of these businesses, irrespective of whether the customer wants to or not.

The result is that when customers go these larger businesses, they mainly buy from the businesses which offer the least problems, or use a service they don’t really want, or start looking to other businesses to supply their needs.

As a side issue, and as demonstrated today, too many banks and larger businesses are at the mercy of their smaller competitors which are trying to take their customers. This occurs when the customer finally realises that these larger businesses will never respect or listen to their feedback about what they need. The smaller businesses by listening to customer feedback, see a business opportunity and look to supply the needs identified by disgruntled customers.

In conclusion, “Businesses are built on hardware, software plus wetware.” The realities of the business world which must never be forgotten, is that your business is at war with survival as the first objective and then to win the war by being profitable.

In any war, you need the best hardware and processes and the best people to manage the wetware side of the business. After all, a war is not just won with hardware and its software, you need to create the wetware side of your business which wins the heart and soul of your customers.

Monthly Business Conundrum

There is no such thing as cheap debt. All debt comes with the responsibility to pay it back in the future. This ability to repay debt will be compromised by many factors including profits, customer buying habits and financial capacity, plus availability of product.

There is so much working against a business and its shareholders in a world where debt is deemed good and savings bad, or lazy. As a consequence, all businesses will be affected by their stakeholders without the capital to survive any disruptions such as those experienced in the last two years where floods, bushfires and COVID were major negative factors.

Following the negative consequences of these factors, we are all now exposed to equally negative ramifications of inflation, higher interest rates and supply chain shortages.

In the coming years, in view of the above, yesterday’s and today’s cheap debt, may not look so cheap.

Monthly Business Conundrum
This Month's Business Inconvenient Truth

This Month's Business Inconvenient Truth

When a business employed a professional credit manager in the past, if the credit manager insisted that a director's guarantee was required to support a B2B credit facility, they made sure that:

  1. it was prepared properly by a quailified lawyer;
  2. it was signed and completed accurately; and
  3. the director(s) had assets to support the guarantee if the guarantee was to be relied upon in the future.

After all, if the guarantee was not prepared or completed properly, or the director had no assets, the guarantee was useless if relied upon to clear the customer’s debt.

Today however, further work is now required. With many directors and their businesses having been seduced into taking on “cheap” debt, this means the net asset value of the director(s) may now be compromised. As a result of taking on too much cheap debt, this factor may also make the value of a directors guarantee valueless.

When businesses are searching desperately for more sales, particularly in a restricted market, they may be inclined to take shortcuts and make few effective enquiries about the net worth of directors. The customer’s director(s) on the other hand, may be reluctant to provide the information, especially as they know many suppliers will be desperate for sales.

The fact of the matter is that whatever decision is made by the buyer and seller when B2B credit is required, both parties will at some stage need each other. If the supplier requires a directors guarantee and the customer has little or no security, the problem is whether it is worth taking a guarantee at all.

Perhaps it is in these situations, a business would be wise about not taking a guarantee at all, and focus on other sales strategies.

Warren Buffet has said that his partner Charlie Munger is quoted as saying “… there is only three ways a person can go broke: liquor, ladies and leverage.” Today of course the saying should read “… there is only three ways a person can go broke: liquor, ladies or lads and leverage.” In truth, there is a fourth way, and that is by litigious parties.

Updates courtesy of

Media Updates

Media Releases

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.