What's New At Credit Matters?

Apologies, it has just come to my attention that our landline telephone numbers have not been renewed. My telephone contact number therefore is the mobile number + 61 0411 649 261.

Currently, I am between a number of assignments and have time available to assist if required. Therefore, I am open to additional business, whether that be a review of your credit and accounts receivable operations or picking up the telephone and calling your customers about unpaid invoices.

Tenure and rates are always negotiable.

The attachment with this newsletter is from RSM regarding their workshops on the 2023 CFE Exam Review Courses.

You will also note there are no listings of media news from the ACCC. This situation has come about about the way their information is presented which is now in a format that makes finding the latest stories too difficult and time consuming to access and then copy in to our newsletter.

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

"Do nothing secretly; for Time sees and hears all things, and discloses all." –Sophocles

Monthly Business Observation

Keeping a secret these days is almost impossible. This fact is often forgotten when people, both in their private and commercial lives, act in a way that is not acceptable or cannot be hidden over the long term. The release of wartime cabinet meetings and other public settings after a prescribed period of time, are examples where past secrets are revealed.

In the commercial world, there are many ways a secret can be exposed because of an illegal, bad or questionable act such as cartel behaviour, financial fraud or some other act not deemed acceptable by society, etc.

Keeping a secret unknown is only possible when one solitary person knows about the secret and remains silent about it. The exception is of course, where there is digital evidence of the secret such as in a text, email or social media where nothing is secret.

The reasons for exposure of secrets are manyfold and include the following in no particular order of importance when:

1. public and private investigations are conducted from interested parties,
2. via a public pod cast,
3. a person within a group which has committed an illegal act gets a guilty conscious and “confesses" the secret where the other people within the group are exposed,
4. a person with a guilty conscious confessed to a crime,
5. there is a death bed confession,
6. a commercial fraud is exposed because the responsible person goes on holiday, or resigns from a business,
7. an audit of a business’s accounts reveals an anomaly, which leads to a further investigation,
8. an aggrieved stakeholder of a business seeks revenge,
9. there is jealousy between various parties to the secret,
10. a claim or series of claims made via the Internet have become a public interest story to be investigated, etc.

In the face of constant revelations of secrets, why businesspeople think they can still get away with bad, illegal or questionable behaviour in business is rather puzzling. The fact is that it is always been in the best long-term interests of businesspeople to avoid indulging in any bad, illegal or questionable behaviour. After all, as many people have found out in recent times, it is almost impossible to keep anything secret these days.

This Month's Business Inconvenient Truth

When we talk about cash in business from the perspective of our introduction, essentially, we are talking about the funds in the business’s bank account(s). We are not talking about cash as a payment methodology, although this is also an essential factor for the potential survival of a business.

Cash in your business’s bank account(s) is the lifeblood of the business and a resource factor all too often minimised by the potential access of credit. The issue is that cash is the means of maintaining control over your business. Access to credit, whilst an attractive thought at first, when utilised, is also the start of potentially losing control of your business.

There may be an argument, that access or finance drawn down for the right reason, i.e., the purchase of an asset to enhance the business’s earning potential, is an essential component in operating a successful business. On that point, I can agree.

The problem is however, that using credit or finance soon becomes addictive, particularly when it is considered to be at a cheap rate. As businesspeople found however at the start of COVID, and the same goes today as interest rates are on the rise, if you have no income, you cannot repay the debt. The most striking fact noticed at the start of COVID  was the number of businesses which declared some form of insolvency within three (3) months of the start of COVID. The same outcome of insolvency can be expected in the future as funds become scarce.

Regarding the extending B2B or B2C credit, another source of cash for your business, the story of uncollectable accounts has grown considerably since the start of COVID. As we have come out of the COVID period, many businesses are now finding they are unable to collect unpaid invoices because their customers are becoming insolvent or are just not paying.

Irrespective of whether your business accepts or extends credit, the fact of business life is that now you are seeing how important it is to understand the role cash plays in the long-term survival of your business.