Credit Matters Newsletters

This month I attended the AICM 50th Anniversary Conference in Canberra. It was a rewarding experience in helping to understand new developments which affect all business owners and their employees. The Conference was also another opportunity to network and meet new acquaintances and catch up with old friends.

A conference is always an excellent opportunity to gain new business insights. In the coming months, you will see a number of modern business concepts and thoughts presented via Credit Matters.

Advertising via Credit Matters

If you are interested in reaching business prospects who need your services or products, contact Kim to see what he can do for you. There are many different opportunities to advertise your business via Credit Matters and it may not be as expensive as you might imagine.

This month, you will find a brochure from CreditorWatch about Apply Easy, a repeat of one of the Bank Doctor's blog's about borrowers being aware , a reminder note from CMARS about their accounts receivable services, Investigator Upgrade and its investigative training courses and how ReConnect Finance can assist with your asset finance needs.

When do you say NO?

Every sales opportunity presents business people with the conundrum of whether to accept an offer to sell on credit or to decline the offer.

Many business people are afraid to say No because they feel are losing a sale. However, selling is never simple. The fact is that there are times when a business person simply has to say No because of the potential of a bad debt, the extended terms demanded by the customer, or an inability to supply due to lack of stock or time etc.

No is also an extremely powerful sales tool as demonstrated by Bernie Madoff.

The conundrum for every business person is therefore in understanding how and when to say No.

When your business suffers loss, one of the key reasons for the loss is that your employees did not complete specific actions which should have been completed. When basic, common sense actions are not completed before a sale, your business will probably suffer a loss.

The theme of this month's quote articulated the reality; it is the actions which we do or don't do today which will influence the results we experience tomorrow. When selling, particularly on credit, basic business actions need to be completed. In today's business environment, the most basic of actions include, completing due diligence, planning properly when commencing your business or in taking on a new customer, and then taking all necessary actions to maintain that relationship with each and every customer.

What happens in many business enterprises is a focus on selling. What is rarely given equal focus, is the payment in a timely and profitable manner. In other words, management has failed to understand and operate to two basic business truths:

(i)  a sale is not a sale until the money is in the bank, and

(ii) a sale paid late often results in a loss. rather than a profit

When a bad debt or the profit on a sale becomes a loss situation, you will often find the causes include:

(i) a lack of due diligence to identify the customer's trading entity and ownership, whether they have a cooperative relationship with suppliers, their financial stability and payment reputation;

(ii) a failure to ensure a valid sale is actually made to the customer;

(iii) identifying whether they can supply the customer in a manner requested by the customer;

(iv) adequate customer service resources;

(v) not employing adequate numbers of professional credit and accounts receivable employees; and

(vi) the intellectual capacity to understand how to use the legal system, if required, to recover the business's assets.

When these situations exist in a business, it is often found;

(i)  the trading entity of the delinquent debtor is different to what they projected and as a result, you are unable to either track them down if they skip or take effective legal action; 

(ii) the customer stole your time, energy and profits because you did not identify the customer's cooperation reputation when interacting with other suppliers;

(iii) cashflow budgets are rarely accurate and cashflow was not adequate for normal business costs or growth, etc.

Selling is not without risk. The process of selling therefore must be designed and resourced in a manner to ensure all actions to complete the sale are completed properly. When the process, resources and actions to complete sales are not completed properly, this is where costly problems occur later and a loss is incurred.