No business gets everything right all the time, no matter how hard they try. Nevertheless, it is an objective which is worthy of attempting. In addition, most businesses do not have all the resources which they would like to have to achieve this perfect goal.
There are certain tasks however, which deserve proper attention to ensure that they are completed perfectly. These tasks include, but not limited to the following.
Due diligence needs to be completed properly irrespective of whether it is for investors, business partners, financiers, employees, suppliers, or customers. Failing to adequately understand the nature, history, reputation, or reliability of these partners is essential in this day and age.
If due diligence is completed properly, as there are no secrets in business anymore, you will come to understand the true character of these partners and the risks or benefits in dealing with them. After all, these parties are essential for your business’s own requirements to be successful.
In regard to suppliers, understanding who and how they operate will be critical in the supply of goods and services. Understanding what their terms of trade actually entail can save many dollars later if anything goes wrong.
Customers are not always profitable if you extend credit. It is important to realise that you can no longer rely on “hoping” you will be paid as a profitably business strategy.
In addition, the “near enough is good enough” philosophy does not work when selling your goods and services and raising invoices. Failing to raise invoices as authorised and forward them to the correct destination as requested by the customer, will reduce cashflow and ensure declining profits.
There are also those customers which can lead to embarrassment later if you supply the goods to a business and they have a bad reputation according to society’s perception of what they do and how they behave.
There are three other parties worthy of mention at this time where due diligence is essential.
The right legal partner is essential to cover all the legal aspects that affect your business these days. This includes preparing terms of trade for your customers and understanding the terms of trade of your suppliers.
The best debt collector you can find is another essential party, if you do not intend to you use your legal partner to help collect payment for unpaid invoices.
An insolvency partner with a great reputation, is helpful if you do not use either of the above parties when contacted by an insolvency administrator, or think you may need specialised information to avoid trading insolvently.
As mentioned earlier, regretfully, no business gets everything right all the time, no matter how hard they try. Nevertheless, it is an objective which is worthy of attempting. There are certain tasks however, which deserve proper attention to ensure they are completed perfectly.
Those tasks and factors which apply, have been put forward for your consideration because “… near enough is good enough” is not acceptable for long term business success. The truth is, the penalties for this business theory always leads to unnecessary costs, loss of cashflow and profits. In addition, due to the business environment in which we operate today, these outcomes may also lead to the demise of your business.
Want to know more, contact Kim at kim@creditmatters.com.au, or 0411 649 261, or have a look at what we offer via our website at www.creditmatters.com.au
