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Published Articles by David Balovich

Title: An Ounce of Prevention
Published in: Creditworhty News
Date: 12/20/00
We are close to the end of another year. Did it go fast or was it our imagination? During the last 12 months did we visit the doctor for an annual check up? Visit the dentist to have teeth cleaned? Have the automobile inspected? Chances are very good the answer to these questions is yes. The majority of states have laws that require one of these and the other two are known as preventative measures.

Did we have the credit and collection department reviewed during the past year? If the answer is no, why not?

The account receivable is the second most valuable asset any organization has and yet it is the most overlooked until after a serious problem surfaces. A major corporation just announced that it is increasing its bad debt reserves due to an increasing number of customers unable to pay its bills. Two major companies in the same industry have announced they are contemplating filing Chapter 11 due to their inability to pay their suppliers and bank as required. Is it possible these actions could have been avoided if credit and collection policies had been reviewed earlier?

We all know what is said about hindsight.

It is generally believed that auditors review the account receivable at year end. However, the majority of audit firms only perform confirmation of the account receivable through random selection of account balances and from that determine reserves. What does that tell us about the effectiveness of our procedures; the thoroughness of our due diligence; and the uniformity of our decision making?

Utilizing the services of a professional credit-consulting firm can prove to be cost effective. The professional credit consultant can recommend changes to improve efficiency; methods to communicate more effectively with management, sales and the customer; identify potential problems before they materialize and advise of methods to reduce risk.

Unlike auditors who converge upon the battlefield after the skirmish and slay the wounded the credit consultant prepares the combatants with a plan to be successful.

I wish you well.

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