September 2010
8 posts
Purchasing Tips
While I am firmly convinced that more money is made on the sell side than the buy side there are still certain purchasing disciplines which must be adhered to, to maximize profitability. Some of the things I’ve learned about the purchasing side of the business over the last 35+ years include:
Always issue a purchase order for all purchases over $100. It isn’t always practical to issue a purchase...
Layoff Tips
One of the worst parts of being a manager is occasionally having to lay people off. While I have no problem terminating people who have done something to deserve it, after 35 years in business, I still lose sleep over laying off good people and who we simply can’t afford during a downturn. Fortunately I’ve only had to do this four times in 35 years, but it’s never easy. However, not doing it when...
Giving Credits and Refunds to Customers
One of my many pet peeves is when you have to force someone you’ve done business with to give you a refund or credit when you’re not happy. When people are that shortsighted they obviously aren’t looking at the lifetime value of a customer. I have made it a practice to give credits and refunds quickly, and pleasantly. It aggravates me when someone finally agrees to give me a credit or refund but...
The Credit Process: Part Five- Collecting...
Most receivables get paid within 60 or 90 days as most customers aren’t deadbeats but some go through cash flow problems from time to time. I’m not going to talk about how to collect regular receivables because most people know that. This post is about how to collect seriously delinquent receivables. By seriously delinquent receivables, I mean receivables more than 90 days old.
Once a receivable...
The Credit Process: Part Four – Using Dun &...
I don’t know why all businesses don’t use Dun & Bradstreet to get credit and payment information about their current and prospective customers. They are the oldest and largest credit bureau. Some of the reasons for not using them that I hear are, “They are too expensive”, or “Their information isn’t always timely or accurate”. My experience using them for over 30 years is just the opposite. We...
The Credit Process: Part Three - The Credit...
Once you have received the credit application back from a prospective customer what do you do then? Well, the first thing to do is to make sure that it has been fully completed. I have found over the years that most customers don’t complete the entire application. Sometimes they can’t be bothered to take the time to fill out the entire application but other times they are purposely omitting...
Part Two - Credit Insurance
Most people I talk to don’t know that you can purchase insurance on your accounts receivable. When you think about it, you insure your property, inventory, trucks, and office equipment, so why not your accounts receivable? In many companies accounts receivable is one of your largest assets yet it is almost always totally uninsured.
I think that your receivables are more likely to go bad at the end...
The Credit Process - Part One, The Credit...
In most B2B businesses the extension of trade credit is required as most, if not all, of your competition is extending credit, so you will have to as well. Other than embezzling there is nothing that will take your business down faster than weak credit procedures. I have seen the third and fourth generation businesses file bankruptcy due to excessive bad debts, especially near the end of a...
