Thursday, October 16, 2008

Cash flow tips from a factoring company

Here are some tips on how to get our invoices paid quicker and improve your cash flow. As a factoring provider, we are experts in getting your invoices paid first.
1. Check to make sure who the correct person is in the company that is supposed to approve your invoice and make sure you send it directly to them for approval.
2. Ask the customer if they are happy with the invoice and if it is approved for payment. Make sure your invoice is in the correct format that they like. This means make sure it has a purchase order on it if that is required.
3. If trading terms are 30 days and you have not received payment as promised, give your customer’s accounts department a call to find out what is delaying payment. It is at this point you might find out if they have lost your invoice or if there is a problem.
Some of our clients are a little reluctant to follow up on overdue invoices. We take the view that if you have fulfilled your promise as a supplier, then your customer should deliver on what they promised to give you in return i.e. payment within a specific time frame.

Wednesday, October 15, 2008

Swings and Roundabouts

I am currently reading an interesting book called "Manias, Panics, and Crashes: A History of Financial Crises (Wiley Investment Classics)"Charles P. Kindleberger, wow what a great read it is!

The amazing thing I have found when reading this is what a short memory I have. Does anybody remember the collapse in Japan in the 1980's where the banks were nationalised, the Argentine crisis? The Mexican Crisis, the 1997 Asian crisis, the dot com bubble bursting, the 2003 collapse?...it goes on and on and further and further back. I certainly remember them now that I am reading about them, but I certainly have not appreciated them lately until now. For some reason we all tend to have short memories and all seem to continue to learn the same lessons over and over again. When one bubble bursts it creates another somewhere else.

So where is the next bubble likely to be as a result of the bursting of this one?

Monday, October 13, 2008

Cash flow and an interesting conversation with a lawyer

I had a conversation last night with a lawyer who was respresenting a customer who's supplier had just pulled their trade credit line on them.
The trade credit line was for $600,000, and this turning off of taps has effectively put his client into liquidation and now they have to go into voluntary administration. This is yet another example of what is happening in the market, and an example of what more is to come (hopefully not). It's too bad the supplier (who turned off the customer's credit) was not using our cash flow facility as we have trade credit insurance which would mean he could have kept on funding the cutomer. But enough of my self promotion. This is a real concern for a lot of business out there at the moment.

In this market it is a good time for people to do a stress test on their business. Run 'what if' scenarios. For example in this case, what if my supplier turns off our trade credit? Do we have a solution or do we just raise the white flag and go into voluntary administration. Another question to aks is, what happens if one or more of my customers go under?

What are your thoughts out there?

Sunday, October 12, 2008

Australia really is the lucky country; Our floating currency

All I can say at this point in time is thank goodness that our currency is a floating one as the plummeting Aussie dollar will buffer our business here that export (including those that export commodities). This may be a simplistic view (I am by no means an economic wizz), but from a businessman's point of view (i.e. practical with holes in my theories), but I don't think the economic commentators have really paid enough attention to this. What do you think?

Be bold not fearful!!

I have now decided to jump on the bandwagon of publishing my thoughts about some of the opportunities and challenges that I have been coming across in my daily business routines.

Today in our morning team meeting I asked our account manager (who has a lot of experience in business) to comment on what she would be doing in her business given the current economic climate.

I was really excited with her reponse that I have now asked her to write me an article that we can send out to our clients so they might be able to draw upon the experience. You should keep an eye out for her post on this blog.

Personally, I believe that the current market is presenting enormous opportunities for businesses. I know from within my circle of contacts that most people are cashed up and have been for some time.

The opportunities being presented are going to be once in a lifetime, and now is not the time to be fearful, but bold. I remember back in the early 90s my uncle sitting me down and explaining to me how he had just purchased a massive shopping centre and that he didnt even have to negotiate with the bank to purchase it. This was all done in the middle of a recession....very bold.

Keep your gearing low (as you always should), do your sums and make sure the deal stacks up. If it does, do the deal. If people had always followed these rules then we wouldnt be in this mess!