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Credit Matters
What's New At Credit Matters?

What's New At Credit Matters?

Our apologies for the delay in sending this month's newsletter. Like many other businesses, we have been affected by sudden changes and unexpected events this month. Unfortunately, we expect more and more business people and their businesses to be similarly affected over the coming months.

We have conducted a review of the Credit Matters website and sought to improve accessibility and highlight the more important features which have appeared on our website. Many of these features offer an insight on how to survive and grow your business, even in these tough times.

Our new feature, Reviewing a Recession, is now up and presents a simple review of the first few months since the recession was deemed to have commenced. In the coming weeks, we will have the next three month review to cover the period from June to August.

Quote Of The Month

Quote Of The Month

You can’t succeed by managing results. You can only succeed by managing processes.”

An advertising header from 1992.

Monthly Business Observation

Monthly Business Observation

It is almost funny when you read statements which suggest “Cash is King” and then see how many businesses treat the protection of their cash with contempt. Unfortunately, it is not funny. After all, as an accountant once said, “A business without cash, is not a business.”

We are also going to see the effect of poor sales and a lack of cash in the coming years because of the recession. It is therefore imperative that business people start to review and manage the process far more efficiently than in the past.

In order to protect your cash more effectively, it goes without saying, there is often little you can do about the factors external to your business. Looking inside your business however, is a different matter. Everything you do, the strategies you implement internally, are your responsibility. Waiting for other people’s authority to enact changes which may be required is neither desirable or necessary.

When operating a business, it is up to you to manage the process. However, you also need to know the results of your actions in order to manage the process properly and to maximise the benefits of the processes in use.

The most important and essential process which my experiences suggest, is the reconciliation of every supplier’s and customer’s account. Every time I hear a CFO, office administrator, or office accountant say, “It is not important to reconcile every account”, I know their business is leaking cash. The lost cash is due to employee and supplier fraud, administrative errors and the actions of dysfunctional and unprofessional employees, paying cancelled invoices, duplicate payment of invoices, etc.

These losses are similar to stock shrinkage in the consumer retail environment where stock is lost through theft by employees, supplier fraud, shoplifting, poor security and administration errors, etc. A definition of shrinkage is provided in the Special Topic area of this newsletter.

The best businesses do reconcile their supplier and customer accounts and as a result, they find all errors of their suppliers and customers such as incorrect payments. Once they find these errors, they have the luxury of deciding, “… will we return the funds or not?” Perhaps they will return the funds to the best suppliers and customers. Alternatively, perhaps they will keep the funds of those who are less cooperative and cause endless problems in compensation.

With every action however, there comes a cost. It is interesting to note how managers these days strive to minimise short-term costs often irrespective of the long-term damage to their business. In my experience and from the stories from the workplace, I have found whatever the cost of the reconciliations, it was more than covered by the funds which were identified as having been made or received incorrectly.

Unfortunately, I suspect many managers who do not reconcile their suppler and customer accounts currently, will not initiate such a project. In their view:

(i) the upfront costs will be too high;

(ii) any benefit which will be untested and unmeasured will not be worth the effort;

(iii) they do not have the cash resources, or

(iv) they believe the auditors will find any errors anyway.

Finally, many of these managers may also trot out that other old chestnut “… because computers don’t make mistakes”, and so that is another reason not to do anything.

In conclusion, I believe it behoves every responsible business manager to initiate reconciliations and then measure the costs against the payments made or received incorrectly. That way you are measuring the effectiveness and cost benefits of reconciling the accounts. I would be surprised if you did not find that the long-term rewards of reconciling the accounts did not clearly pay for any of the upfront costs.

Want to know more? Contact Kim on email at  or visit our website at

Monthly Business Conundrum

The first months of the recession in 2020 have seen a number of business people focusing on survival in the short term, at the expense of long-term survival. Many of these people see the word “Recession” and imagine the full effects of the recession are already here.

In a number of industries, and unfortunately, the effects of the recession are already here and terminal. Consequently, there are business people who have made the sensible, but very difficult decision, to close their businesses. Other business people seem unable to understand or accept that their businesses are zombie businesses only surviving by default.

In the case of zombie businesses, the owners and managers are hanging on for all sorts of reasons, many with good intentions, or in the naive belief they can survive the recession. The truth is however, many of these businesses should be closed now to reduce liabilities and protect the owners’ resources and reputations for the future.

Other business people trying to survive in the present, are lessening their business’s capacity to survive in the long term by downgrading its capacity to do quality business. One of the key differences irrespective of surviving in the short or long term, is to have a point of difference over your competitors. One of these points of difference is to maintain a quality relationship with your stakeholders beyond that offered by your competitors.

Those business people with access to financial resources, positive business disciplines, a good reputation, quality employees and a positive people culture, have a chance of surviving. It is these business owners and managers which may also see positive opportunities ahead, and not just problems. Therefore, they will do all in their power to maintain operational quality in the short term to ensure they stand out from their competitors and survive in the long term.

Monthly Business Conundrum
This Month's Business Inconvenient Truth

This Month's Business Inconvenient Truth

Too many business people think they can gain better value out people by controlling their employees’ thoughts and work practices. In these employment environments, the old saying of “if you pay peanuts you get monkeys” comes to mind.

There are far too many business examples where poor quality or unprofessional employees have caused damage to the business. One example is to walk into a shop where you may see employees looking at their phones instead of looking to help customers buy.

In a B2B relationship, you may see inexperienced people who allocate payments incorrectly, don’t seem interested in solving customer enquiries, or even able to pick up a phone to call for a potential sale or an outstanding invoice. Alternatively, warehouse employees do not concentrate on packing stock correctly, or delivery drivers cannot seem to deliver products correctly. There are many other similar situations where inexperienced or dysfunctional employees are employed on the cheap and cause immense damage to a business’s reputation.

The costs of poor quality employees in the best of times, do nothing to promote the value or image of your business. In times of a recession, these employees can be the difference in the survival of your business. It goes without saying, “pay peanuts, and you get monkeys,” will never be more obvious in these troubled times.

An explanation of shrinkage from Gordon Latimer

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.

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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

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 for options.