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This week credit articles
Measuring credit and collections results
Our society has many scorecards. In sports, we have many, from goals against averages in hockey and batting averages in baseball, to how well we’re doing at work with our annual performance review.
Well-developed and understood measurements help:
- Identify areas of potential improvement and growth
- Reduce errors or defects
- Increase customer satisfaction
- Increase productivity
- Increase cash flow
- Reduce bad debt
Many of the most common measurements in credit and finance are historical measures, measuring things that have already happened. Fewer measurements use targets in the future. That’s not going to change but we’ll discuss that another week.
The most common measurement is Days Sales Outstanding (DSO). This metric is an indicator showing both the age, in terms of days, of a company's accounts receivable and the average time it takes to turn the receivables into cash. DSO can be compared to industry and company averages, as well as company selling terms (e.g., Net 30) for determination of tolerances by the company. There are several methods of calculating DSO.
Regular DSO measures the time it takes to collect your receivables. It provides some (but not complete) understanding of the company's internal collection efficiencies. Three financial numbers are used for calculation…
Read more >
What kills businesses
- Failing to engage and keep ahead of large customers with new opportunities/solutions to meet their needs.
- Nurturing all customers and helping them when they need it.
- Failing to build relationships at different levels. Many business relationships are based on one person. If that person leaves or worse dies, the relationship is often severed unless it is just a commodity-based transactional “we use you when we need you”.
- Not having a sound accounting function. Most businesses know where their inventory is, where each computer is located, but their accounts receivable processes are based on hope.
- Poor training or no training. Canada is near the bottom of the list in productivity and training hours per employee.
- Not watching the competition.
- Poor customer service, including relationships with customer’s accounting. Who knows the influencers that companies have that can destroy a relationship?
Read more >
Last week credit articles
The good, the bad and the ugly:
StatsCan reports corporations earn record profits in 2007
Canadian corporations earned record operating profits of $262.5 billion in 2007, a rise of 7.8% from 2006. Banking, retail, wholesale and petroleum refining industries led the increase. However, about half of the 22 industry groups surveyed by Statistics Canada lost ground in the quarter, with the manufacturing sector reporting the biggest decline.
Retail sales rose 7.5% to $433.2 billion and profits rose to an all-time high of $16.5 billion from $13.6 billion in 2006. Clothing, department and other general merchandise stores made gains, as profits increased 26.3% to $5.6 billion. Retailers of furniture, home furnishings and appliances earned profits of $1.9 billion, up from $1.1 billion in 2006.
Wholesalers earned operating profits of $19.1 billion in 2007, a 12.1% improvement over 2006.
Manufacturers earned operating profits of $45.0 billion in 2007, up 5.4% from 2006 levels. But much of the gain was concentrated in the petroleum, food, computers and electrical products, while other manufacturers did not fare as well. Operating profits fell 5.5% among the remaining manufacturing industries last year.
Read more >
The credit manager’s four-legged research stool
As you may have discovered by now, it is possible to find information about companies in premium services that you’ll not find on the web.
Conversely, you can unearth information on the web that you’d never locate in premium services. Ideally, the most comprehensive search on a company (or any topic for that matter) includes alerts (free and premium), a search on the public web, complemented by another on a premium service, followed up with some primary research (discussion with a real live human, in person, by email or over the phone). Why is this four-point approach preferred? Because not everything that counts is in one place, or online. As you will appreciate, access to the Internet does not mean that industry credit meetings can be skipped, customer visitations eliminated or relationships with credit colleagues neglected.
A word about webcasts
As a researcher, you need to be aware of the changes taking place in the world of webcasts, the Internet version of the conference call. Some companies now use the web as a preferred method of communicating with investors. That means you. So take a look at the main players providing these services to corporations.
Read more >
Past credit articles
| Incentive / Bonus plans for credit and collection staff Part I Read more > |
October 22, 2008 |
| Bankruptcy and Insolvency - The repossession of 30-day goods law Read more > |
October 15, 2008 |
| Getting the best results from collection agencies and law firms Part I Read more > |
October 8, 2008 |
| Ownership of existing customers Read more > |
October 8, 2008 |
| Venerable Dominion Stores grocery stores to be rebranded to MetroVenerable Dominion Stores grocery stores to be rebranded to Metro Read more > |
October 8, 2008 |
| A tale of two credit departments Read more > |
October 1, 2008 |
| Credit card fraud leads to lengthy U.S. jail terms for two Toronto men Read more > |
October 1, 2008 |
| Reviewing importance of payment information in the credit decision and monitoring Read more > |
September 24, 2008 |
| The crisis: Act II? Read more > |
September 24, 2008 |
| Catching up with a lie: How do you prove those dirty little secrets? Read more > |
September 17, 2008 |
| Federal government to stop backing 40-year mortgages Read more > |
September 17, 2008 |
| Chrysler exits auto/truck leasing, GMAC cuts subsidized leases Read more > |
September 17, 2008 |
| Think seriously about continuing education this fall Read more > |
September 10, 2008 |
| New report by Grant Thornton suggests auto suppliers at risk Read more > |
September 10, 2008 |
| Fraud fundamentals: What does this means to the credit manager? Part 2 Read more > |
September 3, 2008 |
| Bankruptcies for June 2008 continue downward trend Print this article > |
September 3, 2008 |
In order to become the best, you have to get over accepting being average
Collection training methods Read more > |
August 27, 2008 |
| The perils of Internet searches for credit information Read more > |
August 20, 2008 |
| Fraud fundamentals Read more > |
August 13, 2008 |
| Credit financing Loan security in Canada Read more > |
August 6, 2008 |
Canada business bankruptcy and insolvency statistics
By province May 2008 Read more > |
August 6, 2008 |
| So, think you know collections? Read more > |
July 30, 2008 |
| Commercial credit analysis Read more > |
July 23, 2008 |
| Business bankruptcies continue falling but personal bankruptcies rising in Canada Read more > |
July 23, 2008 |
| Landlords’ claims can spell trouble for trade creditors Read more > |
July 16, 2008 |
| Credit / Finance management opportunities for improvement and cost savings Read more > |
July 16, 2008 |
| And now Who is next? Read more > |
July 9, 2008 |
| What happened to the bankruptcy amendments Bill C-12 update Read more > |
July 9, 2008 |
| An unofficial early history of bankruptcy Read more > |
July 2, 2008 |
| Business insolvency United States: Increased risks Read more > |
June 25, 2008 |
| In order to become the best you have to get over accepting being average Read more > |
June 25, 2008 |
Cost control in commercial disputes Are you asking yourself the right questions?
Read more > |
June 18, 2008 |
| Credit terminology Personal guarantees Read more > |
June 18, 2008 |
The cheque is not always in the mail unless you make it happen
Collection practices Read more > |
June 11, 2008 |
Business bankruptcies continue downward trend in Canada March 2008
Read more > |
June 11, 2008 |
| Basics of creditor-proofing Read more > |
June 4, 2008 |
Resolving international contract disputes Five key steps for corporate counsel
Read more > |
June 4, 2008 |
| Friend or foe? Read more > |
May 28, 2008 |
| Special report: Legislation risks Read more > |
May 28, 2008 |
| Gaining more productivity from collection staff Read more > |
May 21, 2008 |
| Interesting website for financial managers Read more > |
May 21, 2008 |
| Repossession upon default of your lease Read more > |
May 14, 2008 |
| Canadian and U.S. economic news Read more > |
May 14, 2008 |
| Credit application strategy: The dream credit application Read more > |
May 7, 2008 |
| Canada will escape a recession of its own Read more > |
May 7, 2008 |
| Resolving international contract disputes Five key steps for corporate counsel - Part 1 Read more > |
April 30, 2008 |
| Business outlook survey Credit conditions Read more > |
April 30, 2008 |
| Economic crime across Canada Read more > |
April 23, 2008 |
| Small Claims Court: Proper parties and all possible defendants Read more > |
April 16, 2008 |
| Special report: Legislation risks Read more > |
April 16, 2008 |
| 18 tips and rules for better negotiations Read more > |
April 9, 2008 |
| Statement of retained earnings Read more > |
April 9, 2008 |
| Measuring credit and collections results Read more > |
April 2, 2008 |
| What kills businesses Read more > |
April 2, 2008 |
| The good, the bad and the ugly: StatsCan reports corporations earn record profits in 2007 Read more > |
March 26, 2008 |
| The credit manager’s four-legged research stool Read more > |
March 26, 2008 |
| Winning and collecting in small claims court Read more > |
March 19, 2008 |
| Bankruptcies continue downward trend in Canada Read more > |
March 19, 2008 |
| The revolution begins in earnest in Canada: Canadian manufacturers job losses as the Canadian economy evolves Read more > |
March 19, 2008 |
| Can you collect interest on your delinquent accounts? Read more > |
March 12, 2008 |
| World economy: A further rise in insolvencies in 2008 Read more > |
March 12, 2008 |
| New bankruptcy rules may come into effect in mid 2008 Read more > |
March 5, 2008 |
| The changing world of credit Read more > |
March 5, 2008 |
| Impact of the credit squeeze on mergers and acquisitions Read more > |
February 25, 2008 |
Cheque imaging update:
Can cheque images be used as evidence in court? Read more > |
February 18, 2008 |
| Insolvency case law: Bois Bissbeau Inc., Re Read more > |
February 18, 2008 |
| Creative conflict resolution: 7 tips for negotiating differences Read more > |
February 11, 2008 |
| Canadian construction industry to experience similar performance in 2008 as 2007; leveling off expected in 2009 Read more > |
February 11, 2008 |
| Economic crime still a problem Read more > |
February 4, 2008 |
Competition Bureau - Accountants, lawyers, and other professions:
Economy would benefit from reduction in regulation Read more > |
February 4, 2008 |
| No more deadbeats! Read more > |
January 28, 2008 |
| Income statement: The shareholders Read more > |
January 21, 2008 |
| Financial markets: In the wake of the US subprime mortgage crisis Read more > |
January 14, 2008 |
| Bits and bobbles: The cheque’s in the courier, yaaa right! Read more > |
January 7, 2008 |
Read all previous credit articles 2008 >
Access to the previous 5 years credit article archives (over 600 articles) >
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