Is your credit policy optimised for your business?

Business Process Review

Is your credit policy optimised for your business? What is the risk appetite of your business? Are you in a high or low risk industry and how do you know the difference? What information is available to my business about industry risk types?

Strategically what is the primary purpose of any credit policy? It should be to maxmise revenue whilst minimizing losses.

How important is it for me to manage margin at a customer level for my business? How do you optimize the balance of which customers you accept and those you decline? How do you know you are making the best decisions for your business?

At Blonk Consulting we have the necessary expertise and track record of results developed over 25 years to help your business achieve the best outcomes for revenue/loss and approve/decline.

It is important to remember that every dollar of revenue your business makes goes through a credit policy assessment process.

The BLONK Consulting

Difference

Working closely with you we will run through a series of key questions about your business and some areas you may not have thought can contribute to the best possible outcomes of revenue/loss

Once we have the necessary information a report will be provided detailing opportunities to:

Increase revenue without increasing risk
Reduce avoidable losses without reducing revenue
Reduce operating expenses relevant to the credit policy

Following the discussion on the review we will develop a plan to share with you and look at ways to implement the improvements. Unlike some consultants who may provide a report and charge a fee and wish you luck with implementing it, we will assist and guide you to implement the improvements which are fundamentally changes to habits – we all know this won’t happen overnight.

Some warning signs your credit policy may not be assisting in running your business as effectively as possible:

Shortage of cash to fund the business
Ineffective process for overdue invoices
Imbalance of losses and underachievement of revenue targets/objectives
Little or no portfolio analytics to prioritise daily tasks
Margin insights unclear and or not directly linked to desired business outcomes

Connecting Business Performance with Policy Management:

In addition to the questions around policy management there are also business specific KPI’s required to connect business performance with policy management:

KPI Performance

Supply of whatever the business deems these as for the past 12 months or relevant reporting period.

Business Performance

Including any other useful observations to assist with improving business performance including improving margin performance.

Credit Policy

Review and discuss content and currency and understand risk appetite including payment terms linked to customer margins.

Credit Assessment Process

Do you have too much or too little information on your customers and how much do you need to perform an adequate risk assessment?

Lost Sales

How much revenue was lost in the last 12 months to sales that did not meet the credit policy requirements? Review in hindsight.

Bad Debt

Review the details and circumstances under which the account went bad and what learnings can we benefit from?

Industry Risk Profiles

Understand the specific industry type you are in and the risk level compared to other industries.

Managing overdue debt

Discuss the current process and options to apply effort more effectively to optimise balance between risk and payment.

Understanding Customer Margin & Risk

Discuss ways to ensure your margins are protected and not eaten away by higher maintenance than necessary customers.

Portfolio Performance

Discuss overall how your debt book is performing and including funding costs, payment timeliness and net margins after accurately understanding recovery costs. Also discuss options for managing overdue debt.

Michael and I worked closely together at director level roles at Optus for a number of years. Michael’s expertise in his field was always highly regarded by other senior executives and his ability to produce customised customer solutions to compliment business outcomes was consistently met and/or exceeded.