The Analysis Forums


Counting the cost


In understanding how to take your credit management forward, it can pay to have some advice


Paul Hodgson International business development manager, Forums International


In a recent article for CCRMagazine we presented the notion that no individual department in any organisation is more critical than another. Whilst those thoughts drew an interesting, and often passionate debate, it remains true. Running a successful business requires all


your teams to always do their very best in their individual roles. One or more of the teams underperforming could jeopardise the future of your business. For those businesses that believe that ‘it


will never happen to us’, well, think about Polaroid, Enron, Woolworths and others. There continues to be a catalogue of failed companies caused by a multitude of reasons: l Management – at all levels, keep an eye on the market and the business making effective decisions. Monitor their current position and what future actions are required to ensure success. It is a balancing act, one poor decision can have catastrophic results. l Procurement – some believe procurement is all about saving costs and, whilst this is partly true, there is also the need to select the right partners that support your business. Business-critical purchases may not always need to be stocked, but finding a supplier that can deliver just in time, every time, means you do not always need to have capital sitting on shelves. l Infrastructure – for example logistics. If you are unable to deliver your products to your client when they require them, then someone else can and will. Net result could be saying goodbye to a hard- fought-for and profitable client. So what is the true cost of slow payments and, worse still, bad


and what your suppliers will be charging you. You will evaluate price rises and how your clients will respond to any increases, particularly in times where many consider value by quantity against price. ‘I want more for less’, and also ‘I will pay when I am good and ready’. So what do you do? Take it on the chin,


knowing that every day beyond payment terms is a day that impacts your profit, or waiting for the news that no payment will come since your client has ceased trading? Many contracts are drawn up based upon


credit terms offering X payment terms. For some, this could be 30 days from end of the month or some other variant. But what happens on day 31? You will begin hearing excuses that the


Running a successful business requires all your teams to always do their very best in their individual roles. One or more of the teams underperforming could jeopardise the future of your business


signatory is on holiday, or your invoice is next in the pile to pay, or the client may raise a query. In truth, there are hundreds of excuses! So, what is the real cost of suffering a


bad debt? How much do you need to add to next month’s sales figures to recoup this month’s loss? Let us take an example: the profit is 5%;


this month’s loss is £10,000; then the additional sales required to recover the loss are £200,000. Can you see that number in


your pipeline? And, if you can, how likely is it that you will close that and deliver it this month? If this sounds like your business, then help and advice is at


debt? Should you fall foul of a bad debt, can you survive the impact? During your annual review of your business and future planning, thoughts turn to pricing – what you will charge your clients


June 2017


hand through our forums. We advise on how to develop stronger relationships between credit management and sales teams and how to more effectively manage client relationships. Since we never stop learning and, with anyone having the ability to make a worthwhile contribution, we would like to welcome you to one of our future meetings. CCR


www.CCRMagazine.co.uk 13


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52