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Let Your Business Take Advantage Of An Online Credit Application.

Online credit applications have been talked about in the credit industry for some time now and they are becoming more common among businesses. A traditional business may be wary of adapting to new technologies such as online credit applications but there are many advantages as business becomes increasingly fast-paced.

Let’s take a step back to the principals of credit management and its role in business. We often misconstrue the role of the credit department, diminishing it to simply collecting money when it is due. Somewhat correct. The team is also there to support and work with the sales department as they move along their sales cycle. The credit team will determine:

  • If the prospective customers are who they say they are
  • If they have the capacity to pay
  • Whether there is previous bad payment history
  • If the directors have any adverse information against them
  • and so much more…

The credit team will (should) be consulted along the way, but this component can often drag out the sales process which leads to longer sales cycles and, potentially, leaves the prospective customer looking elsewhere – no business would appreciate that!

So, let’s imagine this scenario:

Your company’s sales manager is about to finalise a large deal that includes an ongoing supply contract over a 24-month period. Before signing off on the contract, the sales manager ensures the potential client completes the company’s credit application.

After submitting the application (including all terms and conditions, guarantees and any special requirements) the sales manager waits for the response from the credit department. Instead, however, of needing to wait for the credit department to manually check all details, request and review a credit check then process this internally, the online form has already done all this! Then, the credit team receives the confirmation that this business is in good financial health. The sales manager completes the sale with barely anytime to finish their coffee.

So why use an online credit application?

  1. Instantaneous data checking of the correct legal entity
  2. Fewer hours spent manually processing for the credit team
  3. Timely response rates for the credit and sales team
  4. Electronic storage
  5. Professionally built to look seamless with existing branding

An online credit application could give your business the edge it needs!

A High level Of Uncertainty: What Can We Expect for International Trade?

Throughout 2018 the international trade environment has been volatile to say the least. Whether this instability will have any substantial effect is yet to be seen, however, the uncertainty around trade and potential tariff increases is very much of current concern.

As threats abound regarding trading tariffs there is a related drop in confidence among businesses and consumers. When dealing internationally, there should be increased attention put to surrounding trade, especially in specific countries and industries that are affected by these changes in risk.

Tariffs have been widely talked about as China and the US, the exports of which account for USD$2.2 and USD$1.5 trillion[1] respectively, lock horns over the US’s attempts to protect its domestic producers. In the short term, it is unlikely that we would see an overall drop in trade, however, due to a forecasted reduction in GDP growth in 2019, the global economy may be set to slow. The escalating threat of tariffs is damaging to confidence and world trade in general.

Of course, those trading internationally, will want to know whether these tariffs and barriers will increase their risk of non-payment. While this would not necessarily be the case, it creates uncertainty in the market.  What will undoubtedly have an impact on payment ability are fluctuations in foreign exchange rates. A reduction in the value of a country’s currency means traders will face increased difficulties when importing and selling in the local market.

During 2018, Turkey’s currency has dropped by 40%. A reduction such as this has an immediate effect with imported goods becoming much more expensive than local alternatives. This reduction in currency value can result in a slowing of economic activity for a country such as Turkey, a hard thing to reverse and leading to an increased risk of non-payment.

In terms of the domestic market, these international trade barriers will probably not have much of an impact in the short term but the reduction in business and consumer confidence can be draining.

Specific sectors that have been impacted recently are steel and electronics. Steel has fallen foul of a global drop in demand leading to a decrease in price. Consumer electronics distributors traditionally find their sales strongly tied to movements in the housing market and a slowdown in house sales will almost certainly affect high street retailers already having to deal with increased on-line competition from the likes of Amazon. More globally, Samsung has warned of a slowdown in sales of smartphones, a warning widely supported by analysts reporting that last year ended with the first ever year on year quarterly decline in sales[2].

Australia has for some years relied on its trading relationship with China to insulate it from, otherwise, global declines in trade, yet China’s growth is continuing to slow., Retail sales in China rose by just 8.5 per cent year on year in May, its slowest rate since 2003”[3], this will clearly have a flow on effect for many traders and importers to the country and long-term sustainability cannot be ignored.

So, what to look out for and consider when trading internationally?

Know who you are dealing with (even check long-term customers have not changed structures)

Consider the macro and long-term events but know what can immediately affect your business

Look for alternate growth opportunities

Without the right protection, remain risk averse

Consider talking to a professional for advice prior to exporting

[1] https://www.statista.com/statistics/264623/leading-export-countries-worldwide/
[2] https://www.crn.com.au/news/samsungs-quarterly-revenue-expected-to-drop-as-smartphone-sales-slow-down-497390
[3] https://www.scmp.com/news/china/economy/article/2150814/chinas-economy-cools-may-beijings-efforts-reduce-debt-levels

A Word from the Managing Director: Kirk Cheesman

What a busy quarter we have had at NCI! Not only have we been busy talking about our online credit application, Credential and new customer monitoring service, Radar, but we have had many staff members supporting charities as part of our renewed Corporate Social Responsibility program.

This has extended to New Zealand, Australia and Singapore. Local teams are encouraged to identify a charity they would like to spend their time with and then work with them for a day. I’d like to congratulate all the teams for their continued support and I look forward to seeing how this develops.

Finally, Christmas is just around the corner. If you have any overdue debts that you would like collected before then, please contact our collections team who will be more than happy to assist.

Kind regards,
Kirk

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