More than ever, all businesses operating in today’s climate
need to have constant and rigorous focus to their commercial exposure.
Against the
current competitive background it is very difficult to contemplate turning away
business especially from a customer of long standing.
However as
business conditions remain difficult we are witnessing a growing trend for
companies to squeeze suppliers in various ways. This can take the form of a
decision to arbitrarily extend payment terms, decide not to take up previously
agreed deliveries or introduce respective price discounts.
From a
suppliers perspective this erosion of operating margin means that in some
instances the best business decision was to leave it to your competitors.
When
stricter controls are in place over such elements as payment terms and credit
limits the result is likely to be a reduction in turnover.
The upside
of such fiscal discipline carries its own rewards. Avoiding defaults by
customers is the surest way to protect the company’s bottom line at a time when
profits are hard won and losses easy to establish.
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