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Published Articles by David Balovich

Published in: Creditworhty News
Date: 2/15/98

Are you familiar with Y2K? You undoubtedly are but may not know it by this name as this is what the tekkies have dubbed it. Y2K is the year 2000 and as all of us know (using computers) that is when our computers may experience a glitch. Business and governments around the world are trying to find a solution to this problem. Many computers will simply revert back to 1900 which should eliminate any problems until February 29. 1900 was not a leap year but the year 2000 is.

This is the computer professionals problem to deal with. I would like to discuss the credit professional's Y2K.

Our problem actually is not new but we continue to fail to address it. However, as we advance into the next century amid the increasing number of mergers and acquistions the problem becomes just as monumental as Y2K.

"Who is our customer" or more aptly, "who are we doing business with"?

How often have we discovered proprietorships are now corporations? Corporations are no longer active and in good standing with the Secretary of State or have been acquired and no one knows who owes for what? When was the last time we requested the following information from our present customers?

Name Legal entity Names of officers, partners, proprietor Name of bank(s), account number(s), bank officer(s) Trade references Persons authorized to purchase Current corporate board resolutions Financial Statements

When was the last time we verified licensing numbers, insurance policies, board members, etc.

If the answer exceeds 12 months it is too long.

Often when we begin having difficulty with the customer we find that the information contained in our credit files is no longer relevent due to changes that have occurred in our customers business but we have failed to notice because:

We've been doing business with them for xxx years. They are our largest customer. They always paid. They were never a problem.

Change is a constant, that is a fact that cannot be denied. Our customer's business is changing every day and regardless of past or present experience we must be prepared for tomorrow.

I suggest we step back and examine what we are doing with our time and CHANGE!

If we are not willing to take a different approach to what we are doing then it simply will not get any better. If we are not willing to stop making excuses as to why we cannot change then we won't.

The role of a consultant whether it be credit, marketing, operations is to review current procedures and look for ways to improve. This requires making changes. All too often the consultants recommendations go unheeded simply because there is a reluctance to change.

Y2K is not simply a management information system problem, it is a problem for everyone associated with life because it is a vivid reminder that we do not address the changes that need to be made today until the problem arises tomorrow and then it is often too late.

I wish you well

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