{"id":770,"date":"2015-09-16T21:30:18","date_gmt":"2015-09-16T21:30:18","guid":{"rendered":"https:\/\/picb-us.com\/picb\/?p=770"},"modified":"2023-08-14T20:59:47","modified_gmt":"2023-08-14T20:59:47","slug":"i-want-a-cheeseburger-in-paradise-please","status":"publish","type":"post","link":"https:\/\/picb-us.com\/i-want-a-cheeseburger-in-paradise-please\/","title":{"rendered":"I Want A Cheeseburger in Paradise, please?"},"content":{"rendered":"

[vc_row][vc_column][vc_column_text]<\/p>\n

I Want A Cheeseburger in Paradise, please?<\/span><\/h2>\n

[\/vc_column_text][vc_column_text]<\/p>\n

In the Buffet that is life are you a Jimmy or a Warren?<\/strong><\/p>\n

By Robbie Burch & Andrea Schlack<\/span><\/em>
\n<\/span><\/span><\/span><\/p>\n

Money is lost or found depending upon how credit lines are granted to customers, and PICB has been the Printer\u2019s stalwart partner by providing services, tools, and ideas on how to improve their results. By focusing on The Printer\u2019s Due Diligence process, and their company\u2019s Collections Procedures, two of the three most important elements necessary to improving cash flow, any printer can put themselves in a position to be successful. \u2018Due Diligence\u2019 helps determine who should be allowed a \u2018credit line\u2019, and \u2018Collections\u2019 is necessary for when <\/span><\/strong>a customer fails to pay, but all too often, Printers\u2019 will ask us \u2018How much credit would you give them?\u2019 and it is this third question that is the last component necessary to establishing a \u2018profit-based\u2019 credit granting policy\u2026..Remember, the longer your customer holds your money the less it is worth!<\/p>\n

So, how do you set your credit limits? Are you more like Jimmy Buffet, A Parrot Head, wishing and hoping the customer pays timely or like Warren Buffet who calculates decisions based upon research and facts?<\/p>\n

Does your credit policy allow you to afford the Margarita along with the cheeseburger?<\/em><\/strong><\/p>\n

Setting a customer\u2019s credit limit is best determined by understanding how much money your company can afford to lose while still maintaining its financial integrity, therefore a simple formula to follow is:<\/p>\n

 <\/p>\n

Sales volume (\u2013) hard expenses (\u2013) soft expenses (=) profits. A (%) of profits is then divided between \u2018credit reserves\u2019<\/span>, \u2018maintenance reserves\u2019<\/span> and \u2018growth reserves.<\/span><\/span><\/h3>\n

 <\/p>\n

The actual reserve percentages you dedicate for each category should be determined by your business\u2019s financial advisers as it must be based upon your own unique financial data, but the recommended percentage for any \u2018reserve\u2019 should NEVER be 100% as that would limit the potential growth that can be obtained through the other \u2018reserves\u2019.<\/p>\n

\"\"Once your \u2018credit reserve\u2019 amount is determined, this is when Warren\u2019s ethic of due diligence will help determine how much of your credit reserve can be dedicated to any specific customer. Not all customers pose equal risks, therefore, they should not ALL get equal amounts of credit. The question then becomes, \u2018How much of your money you are lending?\u201d NOT ALL loans are paid back\u2019, therefore riskier credit customers should get less than lower risk companies, and companies that pose a significant risk to YOUR reserve—are CASH ONLY!<\/p>\n

Remember Buffet\u2019s rule of investment and use it as a guide when setting your customer\u2019s credit limit\u2014Safe investments may grow more profitable at a slower pace than riskier one, and while riskier investments may more often pay greater dividends, if you cannot \u00a0afford the loss you should stick to what is safe and then as profits increase greater risks can be taken safely!<\/span><\/p>\n

Characteristics of a High-Risk Business:<\/em><\/strong><\/p>\n

    \n
  • Recently formed (operating for less than three years)<\/li>\n
  • Insufficient or expired licensing (city, state, & county as required)<\/li>\n
  • The company does not have a physical address<\/li>\n
  • Having no known assets<\/li>\n
  • Mobile number (rather than a published land line)<\/li>\n
  • Previous collection claims<\/li>\n
  • Court records regarding contract issues\/non-payment of debt<\/li>\n
  • Tax Liens<\/li>\n
  • UCC filings dis-proportionate to the size of the company<\/li>\n
  • Credit references indicate slow-pay\/past-due<\/li>\n
  • Non-responsive credit references<\/li>\n<\/ul>\n

    Characteristics of an Average Risk Business:<\/em><\/strong><\/p>\n

      \n
    • The customer has been in business for 3 \u2013 10 years<\/li>\n
    • Foreign ownership but well established<\/li>\n
    • The principal has operated companies in the past which are now dissolved<\/li>\n
    • Home based business<\/li>\n
    • Toll-Free phone number (rather than a published land line)<\/li>\n
    • Court records regarding former employee\u2019s\/labor issues<\/li>\n
    • Tax liens which are older than 10 years and have been paid<\/li>\n
    • UCC filings are proportionate to the size of the company<\/li>\n
    • Credit references indicate slightly late but overall good payment history<\/li>\n<\/ul>\n

       <\/p>\n

      Characteristics of a Low-Risk Business:<\/em><\/strong><\/p>\n

        \n
      • The customer has been in business for over 10 years<\/li>\n
      • Successful affiliated businesses<\/li>\n
      • Has known assets<\/li>\n
      • Published land line for the phone number<\/li>\n
      • No Court records<\/li>\n
      • No Tax Liens<\/li>\n
      • Limited UCC filings<\/li>\n
      • Credit references indicate a positive payment history extending the entire time the customer has been in operation<\/li>\n<\/ul>\n

         <\/p>\n

        Setting the appropriate terms and lines of credit for future customers will never be an exact science, but by asking important questions, like Warren, instead of just being positive, like Jimmy, the risk can become calculated rather than just plain risky. We all want to kick back and eat a cheeseburger in paradise, but if you set your credit lines correctly, maybe you’ll be able to afford that margarita too!<\/p>\n

        [\/vc_column_text][\/vc_column][\/vc_row]<\/p>\n<\/div>","protected":false},"excerpt":{"rendered":"

        [vc_row][vc_column][vc_column_text] I Want A Cheeseburger in Paradise, please? [\/vc_column_text][vc_column_text] In the Buffet that is life are you a Jimmy or a Warren? By Robbie Burch & Andrea Schlack Money is lost or found depending upon how credit lines are granted to customers, and PICB has been the Printer\u2019s stalwart partner by providing services, tools, and…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"_links":{"self":[{"href":"https:\/\/picb-us.com\/wp-json\/wp\/v2\/posts\/770"}],"collection":[{"href":"https:\/\/picb-us.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/picb-us.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/picb-us.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/picb-us.com\/wp-json\/wp\/v2\/comments?post=770"}],"version-history":[{"count":8,"href":"https:\/\/picb-us.com\/wp-json\/wp\/v2\/posts\/770\/revisions"}],"predecessor-version":[{"id":9741,"href":"https:\/\/picb-us.com\/wp-json\/wp\/v2\/posts\/770\/revisions\/9741"}],"wp:attachment":[{"href":"https:\/\/picb-us.com\/wp-json\/wp\/v2\/media?parent=770"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/picb-us.com\/wp-json\/wp\/v2\/categories?post=770"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/picb-us.com\/wp-json\/wp\/v2\/tags?post=770"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}