Cash and Credit Control

1. Customer Service

2. Competitiveness

3. Cash/Credit Control

4. Cost Management

5. Capability Building

In the previous issues, we discussed about Customer Service and Competitiveness. To recap , Customer Service relates to being customer oriented by "Going the Extra Mile" to increase the level of customer satisfaction while Competitiveness is the ability and performance of a firm to sell and supply goods and/or services in our market by providing adequate returns on the resources employed, having the correct mind set of being pro-active and aggressive .

In this issue, we will move on to CASH / CREDIT CONTROL.   Cash plays a major role in all aspects of our lives. It is also a vital component of any profit-generating organization. An organization's assets and business generate revenue, which in turn generate cash inflows. These cash inflows are used for several purposes: to pay creditors, compensate employees, reward shareholders, provide for asset replacement, and invest for future growth.

Cash is unique because it is a single asset that is readily convertible into any other type of assets. However, cash is also the asset that is most susceptible to fraud and abuse.

Cash is King , something we should always bear in mind even in our own private finances. Business wise, in a normal situation, we need to have very tight control over the credit terms of our customers as well as our agents. Collections must be very prompt. Delay in payment by our customers means loss of revenue for the business. But unusual times calls for unusual measures.

The current global economic and financial crisis will inevitably put pressure on our cash flow. Our customers will be slower to pay, more bad debts are likely to come about and banks will be less ready to extend overdraft. There will be conflicts between departments, that is, sales will find difficulty to get orders and therefore may have to consider relaxing rules by giving longer credit terms. Finance, in times like this, would want to tighten up credit control procedures and reduce risk caused by extended credit. Therefore, management has to ensure a balanced approach by having adequate control and safeguards in place while ensuring business continue to sustain. A balanced approach will entail studying the credit worthiness of customers before extending credit terms.

Prompt responses and resolutions of operational and billing disputes. Unnecessary delays always result in a cost to the firm.