As it seems the winter is arriving in the economic landscape.
What does this mean for debt-management? Debt management is like general management: when the market conditions are most favorable the manager must show its toughest side.
Managers tend to control their business the other way: they provide more freedom with positive market conditions, but when the economic climate changes they realize that debtors are the group were the cash flow problem starts.
When market conditions are already worsening they focus on debtors because the credit outstanding has risen to dangerous proportions.
A campaign to call these clients will come often too late.
These clients have more debts and choose to pay those companies that have the strongest debt-policies.
"You have never really bothered about paying too late, why should you now?" is what they will think when you call them all of a sudden.
Debt management is also relationship management.
Part of relationship management is rewarding relations that are loyal.
In debt management this means that clients who pay their debts on time, especially for periodical services, these may be rewarded with a special attention.
This applies only for smaller companies (SME'S) Telco's, utility companies and the likes have other means to manage debtors.
When the market declines, it becomes also clear that having friends as clients - with special payment conditions - is what will harm a business in the end.
The advantage of having friends that use your service is limited to the positive climate too.
You must always be careful no having to return a favor.
That will be asked when you can't deal with it.
The anti-cyclic debt management approach is however too complex.
The best thing is to have a constant approach whether it is winter, spring or autumn.
H.
J.
B.