What’s New at Credit Matters?
Our feature, Reviewing a Recession, has been updated with the next three month review to also cover the period from June to August. and another new blog has been added to the website https://www.creditmatters.com.au/credit-articles-blog/time-is-of-the-essence-if-you-want-to-be-paid-and-keep-the-funds
Another new feature is in the pipeline which I hope will be available in November.
In this month’s Special Topic, we added the link to an article which is all about the value of quality over price. Yes, the article does relate to a sporting club, however the principle is the same in business, quality does matter.
We have also added two brocures from the Australian Small Business and Family Enterprise Ombudsman which should be of interest to all business people.
“… on the hypocrisies of "normal people". They may tell themselves they want the world to be a fairer place, he says, but they baulk at the practicalities of bringing this about because they know it is going to cost them.
Paul Bettany as the personable cynic who runs the trading desk in the film Margin Call, 2011
The problem you have operating a business is that you are expected to operate your business to every whim and desire of society. Therefore, the businesses of today must be good corporate citizens in all aspects. Meanwhile your customers overlook your business to buy cheaper elsewhere whilst also being hit by red tape and regulations by people which have never operated a business.
Now, I am not saying being a good corporate citizen is not a worthwhile objective. In fact, I believe it is a very desirable requirement for which there are many positive benefits.
The problem is; so much of what is being forced onto a business, is actually counterproductive to what everybody wants. There are many negative outcomes for your business, which these three examples reveal.
1 By following the “rules”, the business’s products and services become so much more expensive than many of their competitors.
2 These businesses need to employ additional people resources, e.g. by using some of an existing employee’s hours or add additional employees, to keep up to date with all the regulations and red tape.
3 The costs of employing people become more expensive. It is just not just about paying a “fair wage”. It is all the add-on costs and regulations which apply these days. In turn, these extra costs make employing people very expensive.
So how are “good business citizens” treated by society? This is a good question. In actual fact, many of these businesses are treated badly by those who insist a business must be a good corporate citizen.
Briefly, we see that:
These days, you see a lot of people, regulators and do-gooders, calling for businesses to be better social citizens. Unfortunately, when a business answers these calls, they are treated poorly by the same people. which called for the business to be a better social citizen
The intriguing thing these days is how many businesses find that when their customers don’t pay them, they complain “… it was not their own fault’, or … it is always somebody elses fault”. For instance, you may hear them say:
“… it was the debt collector’s fault” they could not collect the debt, or
“… legal action is not worth it because you cannot force the customer to pay even if you win the case” etc.
The sad truth however, is that the same people never look inwards to their own businesses. If they did investigate with an open mind, they would usually find the fault(s) were a result of their action or inactions.
It is always enlightening when you start interviewing the people who complain about their non-paying customers and hear their excuses on why it wasn’t their fault. It is not unusual for them to say for instance, we couldn’t afford:
In these and almost every other reason which is supplied, we note it was the complainants’ own decisions which caused the problems. At the end of the day therefore, if you don’t seek to properly protect your business’s assets, you cannot really blame other people when they steal from them.
Business professionals are continually reminded on the benefits of efficiency and quality business resources and processes. These are the factors which assist to reduce mistakes, reworking the same piece of work or reissuing invoices and save money. Never has this issue been more important than in a pandemic and recession period. What is so disappointing is that after 6 months of the recession, how so few business owners and managers have still not got these messages.
Today it is still possible to see in your business interactions, where a constant stream of mistakes and problems with unpaid invoices, keep reoccurring time and time again. As a result, with each of these problems, a non-beneficial cost is incurred.
The main reasons these problems keep reoccurring include, a lack of attention on doing things properly the first time, poor record keeping and maintenance, a lack of professional people and a refusal of management to change, or adept to new ways, or spend money properly to grow the business.
Since the start of the recession, we have seen frightened business owners and their managers trying desperately to save costs by reacting quickly and without serious thought to any negative repercussions. As a result, they retrenched or reduced hours of work for staff, over worked others and in doing so, made competent people appear incompetent.
Two of the key factors for taking the above actions were:
1 failing to see a recession was already in the process of forming and management taking prior actions to “future proof” and protect their business; and
2 when the recession was obvious, these same managers failed to understand how they might see the positive side of the recession which may have created a more profitable and better business.
As a result, we still see same issues reoccurring and reducing business profits with every non-profitable action.
The following link is to an article introduced previously via one of our newsletters. Whilst this article is on why a father chose to spend so much money on his son at a local sporting club, the principle is the same in business.
Quality in purchasing brings so much more than just the cost of the product or service. It is a point worth remembering in these tough times. “Cheapest upfront may not always be the best policy”.
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