Crossing the line

 

The most important component in any business relationship is the question of trust.

 

The ultimate demonstration of trust and good faith is when a Supplier delivers goods to a Customer on Credit terms.

 

It therefore is incumbent on the Buyer that they acknowledge this act of trust and observe the agreed payment terms.

 

With the current pressures it is easy to understand the temptation of “pinching” a few days extra credit but this type of behaviour soon begins to pall. Once a Supplier feels that their Buyer is taking undue advantage the relationship is damaged sometimes irreparably.

 

For any relationship to be sustained there has to be mutual benefit. When a Buyer gains a reputation for persistently crossing the line the merit in maintaining the account is questionable.

 

Getting personal brings its rewards

 

Resulting from technological advances business practises have changed markedly in recent years.

Although many operations are completed electronically in this virtual world we should never forget that essentially commerce is about people trading together.

The reality of the real world is that goods need to be moved from point of production to point of consumption and obviously the diverse elements which make up this chain cannot be achieved solely via a computer terminal.

It makes sound economic sense to foster and maintain good customer relationships as it has been determined that it costs up to five times as much to win a new customer as it does to retain one.

There is an old adage “know your customer,” this dictate has never been more important than in these uncertain and challenging times.

 

Customer service - the art of the achievable

  

The old adage the Customer is always right has come in for a fair amount of scrutiny recently and there are many times when plainly the Customer is in the wrong.

 

Notwithstanding it is of paramount importance to the sustained growth of any business that the Customer is kept onside.

 

The key requirement that any Customer wants is to feel that his/her business is valued and appreciated.

 

In business securing the deal is only the start of the process and the repeat order very often stands or falls with the after sales service (or lack thereof).

 

Simple but effective measures such as ensuring all contracts are performed efficiently and within due time and that any complaints are handled promptly and with courtesy will go a long way to building and maintaining long lasting relationships.

 

All companies have their share of difficult Customers with whom it would be easier not to deal. However, in these difficult times there are many who would willingly take this “problem” and revenue off of your hands.

 

The overhead monster getting hungrier by the day

 

The UK offers a very attractive market for companies wishing to export their products. Counter party risk is identifiable and can be successfully managed.

 

However one barrier may be the perception of high operating costs.

 

There is no doubt that to commission and run a UK operation can prove a costly commitment.

The lists of outgoings such as rent, communications, staffing costs are daunting, particularly in a start up situation where income streams are lagging far behind these costs.

This is where we can assist you, as an established independent company, we have experience of representing overseas organisations in marketing product into the UK.

 

In addition to opening up new markets for your products and services we can also police the all important areas of logistics and payment of your invoices.

 

An introduction to our activities can be seen on our web site www.glbconsulting.co.uk or alternatively why not contact me at gordon.blackburn1@btinternet.com to arrange a meeting to discuss how we assist you in entering the UK market.

The merit of a Pre-emptive strike

 

The current economic data point to the fact that the third quarter of 2013 will produce difficult challenges for all.

 

As domestic budgets are ever more squeezed this will impact on businesses across the board.

 

This is an appropriate time to conduct a top to tail analysis of your business.

Undoubtedly there are areas which would benefit from some radical adjustments/ change of direction. The consequence is not acting now could have very negative effects in the next few months.

Now is the opportunity to tackle difficult issues rather than adopting an ostrich "head in the sand" attitude.

When trying to explain the outcome of a disastrous strategy to your Shareholders or Bankers it will be of little comfort to trot out the tired old defence “it seemed like a good idea at the time”.

 

 

No time for sentiment

There is a growing trend for companies to bully their suppliers over the question of payment terms. It is not unusual for companies who hitherto had paid on the basis of 30 days to now demand switching their suppliers to 90 day payment terms.

A growing number of companies are seeking to stretch the length of their payment terms by all manner of means both fair and foul.

Such terms can only be served by larger organisations with adequate cash reserves.

For the small to medium supplier it further ratchets up the pressure as Banks are unwilling to increase their credit lines.

As profit margins are further squeezed by increased operating costs the importance of maintaining cash flow is crucial.

Business is hard-won in the current climate, but above all there has to be a commercial raison d’être for any transaction.

Mutual reciprocity has to be the basis for the customer/supplier relationship for it to remain worthwhile.

 

Banking scandals – nothing new

A record from the Bank of England’s archive shows it transferred £5.6m of gold from Czechoslovakia on behalf of Germany's Reichsbank, following the Nazi invasion in 1939.

The gold was moved from the National Bank of Czechoslovakia's account at the central Bank for International Settlements (BIS) to an account managed on behalf of the Reichsbank.

Some of the gold was later sold in London.

The Bank produced the 10-page document, following the Second World War amid fears the bank's position had "never been thoroughly appreciated" and that "their action at the time was widely misunderstood".

It states: "On March 21, 1939, the Chief Cashier received the request to transfer about £5.6m gold from the BIS No.2 Account to their No.17 Account.

"The bank, although it was no business of theirs, was fairly sure that the No.2 Account was a Czech National Bank Account and they believed, although they were not sure at the time, that No.17 was a Reichsbank.

The amount was transferred on the same day and a small further amount on March 22.

Between March 21 and 31, the gold received on the No.17 Account was disposed of, (with) about £4m going to the National Bank of Belgium and the Nederlandsche Bank and the remainder being sold in London."

Particularly telling is the comment “although it was no business of theirs,(the Bank) was fairly sure that the No.2 Account was a Czech National Bank Account and they believed, although they were not sure at the time, that No.17 was a Reichsbank.”

That’s certainly a tried and tested defence which we’ve become used to hearing.

As recently evidenced with the Banking community it’s a case of plus ça change.