When asked to review operating systems and strategic plans, I find it surprising that even in these difficult economic times many companies continue to adopt a laissez faire approach to their financial controls.
These companies fail to recognise the need for strict discipline in respect of Stock turn and control but what is even more disturbing in the reaction to the Debtors book.
As more and more Customers seek actively to delay payment to Suppliers this element of business policing is even more critical.
When a Customer exceeds the agreed payment terms, they are in reality using the Supplier as an alternate (unsecured overdraft). I have seen this situation spiral out of control so that in a worst case scenario the Supplier is forced to keep “supporting” the errant Customer for fear of realising a bad debt. Think of the parallel to the current Greek situation – it is a slippery path.
Take a long hard look at your accounts receivable – are you happy to see 30 days drift into 60 and beyond? Have you considered the damage that is being done to your company’s financial position?
Ask yourself “who is picking our pocket?”
It may well be that you conclude that an overall appraisal of your business is overdue - this is where I can help.
Why not get in touch with me at gordon.blackburn1@btinternet.com and I’ll help you get back in control.
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