MONEY SHOP


Footwear Today’s financial plumber, footwear retailer David Gummers, talks about money collecting.


I


received a statement from a factor (money collector ed.) this week. I will try to be very careful not to denigrate factors! I am sure they do a


wonderful job for their clients. However, I am not going to spare any vitriol for people that feel that they


need to use them to collect their money for them. Most businesses pay their accounts on time as they should and those that do not should be punished with not being supplied until they have paid their bills in full. You should only need to waste company money if this occurs.


While I do not know that much about the charges that factors impose for


being responsible for collecting the money on their client’s behalf, I would have a guess that they would be charging between 10% and 20% for this service. This strikes me as being a complete and utter waste of money. If the supplier has a turnover of above £400,000 they could employ a very good credit controller for less than they are forking out and give their customers cheaper products.


My father used to say always be wary of firms that use factors because


they are lazy and may well not be running their company efficiently, as if they are wasting money on credit control what other areas of their business is having its money wasted. He always described this as a false economy, as a factor actually has no more power for debt collection than the company itself. I would imagine that my father will be spot on in this regard.


I would question whether they are on the cheapest electricity tariff,


phone contact and insurance. I have no evidence of this, but if a company is profligate in one area they will be less than prudent in other areas as well. While, it is not my job to tell another business how to run its company, this gives me alarm bells. I will continue of course to buy their products while they remain commercial, but I am full conscious of the fact my customers have to pay at least 10% more for their product.


Turning to another area of business that has been exercising my mind this


month, the thorny subject of newly imposed minimum forward orders. I do not ask a rep or agent to come to see me, I either pick up the phone


or order at a trade show, so therefore do not cost the company much in time or effort. I always pay my bills on time within full discount terms. I would not expect them to give me shoes in preference to a firm that buys more than I do, but to stop supplying the retailer, is, I believe arrogant, when the number of retail outlets is dwindling on a monthly basis. Again, it is not for me to tell other businesses how to trade. But, I do find


it strange that customer loyalty counts for very little these days. I could understand it fully if I was demanding to see the rep or agent four


times a year and the accounts department was always on the phone chasing money, but just to put bring in arbitrary rules dreamt up by someone who is sat in an office, is not that smart I believe.


The real world is not as black and white as these money men would like it to be! To misquote my father again “Rules are there for the observance of wise


people and the sagacity of these people needs to be questioned.” Fortunately, there are plenty of people in the world producing shoes and


we will find another source of supply. The one thing I will never do is jeopardise my cash flow to please a


supplier. I think that ditching loyal customers is a short sighted policy that in the future suppliers will later regret. Another firm dumped retailers a few years ago and their UK market is dwindling, as they no longer have the representation they once had. They are still exporting well though, while ignoring the home market.


Factoring out debt collection is uneconomic for the business and


penalises the end user with higher prices. Cutting out retailers who are good payers is not great business practice


and shows that loyalty counts for very little. Though it is for businesses to decide how they want to operate, I hope


they will heed some well-meant advice, as poor decision making does have a dramatic effect on the bottom line!


If you would like David to look at your business costs, he promises that if he cannot save you any money you pay him nothing. But for every pound he saves you pay him, 15 pence. If you want to learn more email David on david@fdickinsonfootwear 01229 580654 Website: http://www


.fdickinsonfootwear


.co.uk or call .co.uk/


38 • FOOTWEAR TODAY


• JUNE/JULY 2016


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