More than
ever, all businesses operating in today’s climate need to constantly scrutinise
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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