Credit Matters Newsletter
In This Issue
- What's New At Credit Matters?
- Quote Of The Month
- Monthly Business Observation
- Monthly Business Conundrum
- This Month's Business Inconvenient Truth
- Tradies Hint and Notes
- Latest Blogs & Readings
- Special Topic
What's New At Credit Matters?
Welcome to our May newsletter. The focus this month relates to various matters relating to getting paid.
Last month we introduced a new section titled Tradies Hints and Notes in our newsletter.
This month’s quote and blog focuses on employing the best people you can attract to your business.
The conundrum this month asks the question, “… should the credit and risk management departments be considered as cost centres or profit centers?”
Our inconvenient truth is that growing your business too quickly is a potential business killer.
This month’s Tradies Hints and Notes is about documentation and terms of trade.
The Special Topic identifies Warren Buffett’s “economic moat”.
There is a brochure from Barry Urquhart with another important subject about ghosting of business addresses.
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
“… he said that if you’re the smartest person in the room, you’re in the wrong room. I’ve made the biggest leaps in my own journey when I’ve surrounded myself with people who were five or ten steps ahead of me.
Attributed to mentors on LinkedIn
Monthly Business Observation
In the world of business today you need the very best people you can attract to work in and on your business because they add value above and beyond their dollar cost. It is said, and is well known, as a business owner, CEO, CFO or any other senior manager, you need to have an understanding of most aspects of business.
Rarely however will you have the knowledge of a specialist professional that knows the little things that make or damage your business.
One of the factors that causes so much damage to a business are the little things of business. A good example is an incomplete, out-of-date, or simply the wrong type of trading agreement or contract for any specific customer. Your professional credit manager will, and equally important, know if the correct document has been sent and then completed properly when it is returned by the customer.
Furthermore, your professional credit manager will understand what all the terms of the trading agreement or contract mean, and know how to use them in negotiations with a recalcitrant or slow paying customer.
Many business owners, CEO’s, CFO’s will not understand the above information and its importance, or have the discipline in the above situations due to lack of experience, vested interests, pressures associated with their positions, or are too proud to admit their limitations.
As several well respected and successful businesspeople have suggested in a different way, I have no problems employing the best people I know because I want to maximise my business’s value.
On another level altogether, there are many valid and different ways to employ the right people these days, and/or, many well-credentialled and experienced professionals who are no longer looking for full-time work or want a senior job in your business.
If you wish to create the best possible opportunities to maximise profits and stay in business today, you need to start employing people who are “smarter” than you for your business.
Monthly Business Conundrum
The real problem for most business organisations these days is that they find it hard to overcome the old idea that credit and risk managers and their departments are a cost to the business. It still seems today that the notion persists that credit professionals are just debt collectors which stop valuable sales deals, whilst risk professionals create problems and cost money related to events that may never happen.
The reality is that both departments are so much more and are equally deserving of being treated as profit creators, just as are sales and marketing. The role of these departments today is to engage with your business’s stakeholders via the right type of strategies that:
- minimise losses by identifying mistakes, and then resolving them to stop them reoccurring,
- create profitable operating scenarios to minimise or avoid risk,
- understand where the leakages occur in a business relationship with customers and suppliers,
- understand the language and operational tactics of fraudsters and slow paying customers,
- identify sales strategies to maximise profitable trading relationships with customers,
- understand the legal environment, legislation and regulations which is becoming increasingly costly, burdensome and complex,
- can provide positive learning information and assistance when dealing with insolvency administrators, and understanding the bigger business picture, etc.
If your business really wants to survive and maximise profitable trading relationships and then go on to make long-term profits, you will consider treating your credit and risk departments as profit centres. It is not a simple task to change and then quantify how these departments become profitable centres. It is however an objective that is very necessary in today’s fragile business environment.
This Month's Business Inconvenient Truth
There is nothing wrong with a desire to grow your business to reach its maximum size, potential, sustainability and profitability. In fact, it is usually the best option to survive in the long run in many cases. It is essential that your consideration and research however is completed properly and within the capacity of your financial and other resources.
It is also wise to identify whether your business can be grown because not all businesses can be, or should be developed beyond a certain level. After all, there are situations where it may not be advisable to grow your business beyond a certain point because many small businesses do extremely well by staying small.
When the desire to grow your business is done inappropriately, without due diligence, or sufficient financial and other resources, or at the wrong time due to economic conditions, that is when disaster can occur. For instance, we are now in a period of some uncertainty, when what are seen are a number of potential and often attractive opportunities become available. This may be due to other businesses and owners of assets which are struggling financially. It must be remembered however, the word potential is a word with a double meaning and may mean a potential win or a potential loss.
What happens as you expand organically or by purchasing another business or assets at a discount, is that unless you have not prepared properly, unforeseen troubles soon become obvious. When these troubles become too problematic, management and employees can become so busy working IN the business and there is no time to work ON the business.
Ultimately, the chaos occurring on a day-to-day basis because of the unforeseen issues multiplies and starts overwhelming the business entirely. If this situation continues often or long enough, it may lead to the demise of the business.
At the end of the day, especially in these troubled economic times, care must be taken to expand your business. It can be difficult not to do so as many attractive opportunities may present themselves. If you are prepared to take a chance when these opportunities occur, it is essential to complete due diligence and ensure you have your own business in order, plus have the finance and other resources available to ensure success.
This section is devoted to Tradies contemplating going out on their own, or currently working in their own business. It is a basic introduction on the key factors in running and successfully operating a business.
Each month there will be a helpful hint on important issues which they are likely to face in operating a business.
If the tradie needs further information, they can also purchase a PDF booklet for AUD$5.50 including GST via Credit Matters website. This booklet offers basic insights on various business matters written in easily understood English. It can be downloaded to their phone or tablet and carried on the job for immediate assistance in case they need help for an unusual situation.
When a tradie transfers from being an employee to starting their own business, they are often unprepared to deal with all the issues of being in business. It is therefore important they have valid and useful documentation and terms of trade.
Latest Blogs & Readings
An economic moat, is often attributed to investor Warren Buffett, is a term used to describe a company's competitive advantage. Like a moat protects a castle. An economic moat can also be applied in the commercial world as it provides certain advantages to help protect the company’s point of difference from their competitors. Wikipedia
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.
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.