Craig Brunsden, Chief Marketing Officer, Axiz, says that credit and working capital are big issues no matter where you are in the channel today. Everyone is cutting back and tightening controls, so it’s not really possible for distributors to be anyone’s saving grace.
Resellers are not the only ones to feel the pinch in the current economic environment, Brunsden says. Distributors themselves are having to change the way they do business and, ensure they exercise caution. He believes the channel shouldn’t only take stock of things like costing and pricing policies when the economy is down.
“The tightening of purse strings is not a new scenario to South African business, and if your business has traditionally followed well-guarded spend policies, it should be business as usual during adverse prevailing economic conditions,” says Brunsden. “While I believe businesses need to continue to manage their debtor’s book in the same fashion as at any other time, we have been forced to be more vigilant on our risk position and to tighten up risk control.”
Tightening risk control includes getting tough on payment terms for debtors. Brunsden suggests assessing each debtor and ensuring that they will pay timeously. If you realise you are facing a cash-flow problem, begin shortening the payment cycle. Another avenue is to meet with creditors to discuss potential changes in settlement terms.
Lessening your risk also means that the price of currency must be factored into business deals. This influences critical factors like pricing and how aggressively you pursue business, Brunsden says.