The private sector is showing some fairly significant signs that the economic downturn is starting to hurt. Stats SA’s Quarterly Financial Statistics (QFS) Survey was released recently. It analyses a range of financial measures among formal businesses and found that the average South African business’s profit margin has shrunk to 5%. It was around 9% ten years ago.
This means that the average business only pockets 5c profit for every R1 of sales.
While the statistics are just on average, it does make us cogently aware of the fact that many business owners out there are feeling the pinch. Operational costs – such as electricity, water and labour costs – are rising above the inflation rate to levels that make sustaining a business very difficult.
In times like these, managing your Accounts Receivable can be a delicate process. Customers – our fellow entrepreneurs – who have been reliable payers in the past might start to miss a payment here and there and it’s not hard to understand why. Having to contact the business owner to follow up on the outstanding payment can be awkward and is, not surprisingly, often avoided until sometimes it’s too late. The debt may have to be written off and worse still, the relationship may have been lost.
This doesn’t have to be the case. We can assist you by being the professional and accommodating collection partner in the middle that contacts the debtor with payment options. If you’re already one of our debit-order collection clients, better still. The debtor knows us and we know them. We know which debtors are having a bad month and likely to pay and which are not. Importantly, your fellow entrepreneur is being given support and options rather than the cold shoulder. Which approach is more likely to work?
Should you wish to know more, please give us a call or email us at debtsolution@threepeaks.co.za