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
- Latest Blogs & Readings
- Special Topic
- THE LATEST ASIC UPDATES
- IBAC UPDATES
- ACCC UPDATES
What's New At Credit Matters?
As mentioned previously, we are working on the development of a new business model for Credit Matters, which will take a little time. One of the changes has been to review our telephone contacts. As such, the only valid number is now + 61 411 649 261
In the meantime, we will continue to send our monthly newsletters and if you would like to promote your business services you can still contact Kim at kim@creditmatters.com.au.
As always, Kim is available to help with your questions and concerns if you need any assistance.
Please note it doesn’t hurt to make contact if you have any questions or realise you need help. It will hurt however, if there are actions you could have taken but didn’t because you didn’t ask for help, or ask the questions that are worrying you.
Quote Of The Month
“It's not what you look at that matters, it's what you see.” Henry David Thoreau
Monthly Business Observation
One of the main factors seen today is the lack of management foresight which has already cost many businesses a great deal. Alternatively, management has failed to change their operation and business model to acknowledge the current circumstances and prepare for the future.
Change is occurring at an ever-increasing rate, even more so than in the previous “normal” pre COVID-19 world. There are a number of businesses which have adapted magnificently. Others have seen the writing on the wall and are adjusting their business models to account for the current and future business environment.
There are unfortunately, the usual suspects which are the naïve, the arrogant, and the zombie businesses owners, which have failed to change their ways. Alternatively, others simply cannot see any proactive way out of their troubles and so continue to exist in the hope they can somehow survive until better times.
Failing to see the real world as it exists now and failing to understand what the new normal may look like, means unfortunately, you do not control any aspect of your business’s destiny in the future. The consequences of you not seeing and understanding what is happening around and the information provided by your own business affairs, can be fatal. It means for instance, missing opportunities to minimise losses, or to find profitable opportunities.
The ability to see and understand your business’s true state of affairs provides opportunities to take actions early to reduce losses and protect your long-term reputation and assets for the future. On the other hand, you may be able to enhance the survival rate of your business, overtake and take advantage of your competitors, or find new products or services by adapting your current business formats.
A perfect example of not seeing reality, which is often missed by management, is the truth of their financial figures in the debtors ledger and associated reports. It is these areas where the information is readily available to improve the viability and profits of your business. Again, the proviso is that you must truly understand the figures. After all, the information may reveal the potential amount of cash sitting in your customers’ bank account that should be in your bank account, or the problem areas within the business which show a lack of attention to resolve problems.
The lack of attention to this one area cannot be emphasised enough in light of the current business environment and the likely development of negative factors in the immediate future. There are many other areas of the business which can also be reviewed for improvement. One of the key reasons for this lack of attention is, I suggest, because business owners and management see the information in the media and in their financial reports. Regretfully, however, all too often they do not seem to understand what they are seeing.
Monthly Business Conundrum
It is often said a business’s employees are its greatest assets. What is not mentioned is the caveat which points out, employees need to be treated properly, should be experienced and well trained, so they are also committed to the long-term welfare of the business.
If the above conditions are not met, then the opposite is true. In that case, the employees may cause more problems than they are worth. After all, they are only seeking to satisfy their basic needs, or they find ways to benefit themselves against the long-term benefit of the business.
As the old saying goes, “You only get what you pay for.”
Therefore, when your employees are paid less than they are worth, or are deemed to be cheaper to employ than experienced and professional employees, it is unlikely these employees will be committed to the long-term welfare of the business.
In the current business environment, experienced and committed employees are often the difference in the survival of the business or in losing it. From another perspective, experienced employees committed to the business also make less mistakes, understand your customers and these attributes often leads to increase sales.
One final point is worth noting. The expense of seeking and training new employees is well documented and often far more expensive than keeping existing employees. For instance, it is said the average cost of hiring a new employee in Australia in 2021 is about $21,000 and the process takes 8-12 weeks.
The conundrum therefore is to decide whether it is better to employ new and cheaper costing and inexperienced employees, or keep the more expensive employees? The decision you make may be the difference in the survival or loss of your business
This Month's Business Inconvenient Truth
We operate in a business world which suggests debt is good and savings is bad. A number of experienced and wise businesspeople would dispute this business ethos. Recent experiences under Covid also suggest that debt has not always been a friend. In fact, debt has caused the demise of many businesses lately.
As a result of the above encouraged debt ethos, currently there are endless opportunities for businesspeople to access finance. These opportunities are provided by governments, banks finance companies and private investors. In truth, under the right circumstances, taking on debt can be beneficial for the long term success of your business.
The problems with taking on debt however are rarely explained or discussed. In fact, there are many negatives on taking debt, which include but not limited to:
- the financier has control over your business affairs to some degree;
- history reveals businesses have been destroyed by arbitrary decisions of financiers if they perceive your business is not doing well or trading insolvently;
- the process of obtaining debt can be both time consuming and emotional;
- the time taken to complete finance documents and actually obtain the finance may cause you to miss out on a special opportunity to buy an asset;
- the additional and associated costs when taking on debt such as insurance, valuations, registering security charges, finding referees etc;
- ensuring you have the cashflow to pay instalments, plus the interest charges;
- understanding only a percentage of the interest costs are tax deductable.
The benefits of savings however include but not limited to:
- no other party controls the affairs of your business;
- the emotional freedom of not having to ask others when you want to make changes to your business affairs;
- time savings because you don’t waste time with financiers as time is money;
- more time is available to manage and operate your business;
- no embarrassing and emotional knockbacks;
- no debt and associated costs;
- being able to pay for unexpected assets and perhaps also get a discount for cash, etc
Despite the current ethos that debt is good and saving is bad, the current business world shows us that perhaps debt is not always good. Yes, at times, additional debt can add value to your business. As the evidence shows since the advent of Covid however, debt has also been the ruination of many businesses, with long-term negative consequences.
On the other hand, savings offer a number of positive financial, time and emotional benefits, and have been found advantageous for many businesspeople since the start of Covid. Unfortunately, many of the benefits of savings have often not been considered or advocated at the same time.
The inconvenient truth is that debt is not always good, and savings has many benefits. Perhaps this should be the real message for these times.
Latest Blogs & Readings
Inflation and stagflation are amongst the most dangerous situations which will become evident in the coming months and years.
Updates courtesy of www.asic.gov.au
Media Updates
Media Releases
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.
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.