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.
It is worthwhile to remember the old mantra - turnover vanity,
profit sanity, cash-flow reality.
No comments:
Post a Comment