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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