Successful and unsuccessful credit decisions
Posted: Wed Jan 22, 2025 10:05 am
Jarbas Nei Maçaneiro is the Director of Belsouth Gestão e Participações and worked for 40 years in financial institutions. He commented on the topic. “By following many financial statements, I noticed a series of wrong decisions, many of them at the time of making investments, in the eagerness to increase sales or find a new client, the company needed to buy machines or take some more significant action, these are generally considerable amounts and in the anxiety to do business quickly and generate more cash, they ended up not taking the appropriate source of financing.”
Regarding investments, Jarbas recommends that companies do norway phone number list use short-term or working capital funds, even if they have funds for capital. The ideal is to spend a lot of time planning and finding a suitable source that is long-term and does not compromise working capital. “Often, what was a great opportunity turns into a nightmare. Every investment has a maturity period and the return does not always occur in the expected time.”
Another point of attention is companies that concentrate sales on a large client, since organizations that purchase in large volumes end up having access to more competitive prices, resulting in reduced margins and over time becoming a huge trap. Jarbas gave an example of good practice regarding the issue of sales, “I worked with a company that had 30% of its sales concentrated on one client, which required a lot of attention from the team. At a certain point, the organization decided to break with this client. This had a huge impact, but over time it proved to be the wisest decision, because it broke with this client that demanded a lot of time and attention from the factory and directed that production effort to smaller clients. As a result, it discovered that these smaller clients provided higher margins and did not demand as much from the production line. It is a difficult decision to reduce sales at first, but it was the decision that allowed the company to grow exponentially.”
In their day-to-day work, teams and managers need to fulfill their responsibilities, generate sales, paperwork, and fulfill their responsibilities to the bank. In these cases, it is also interesting to have an outsider's perspective. "There are cases in which the change in thinking came from someone from the outside, who takes a critical look without being too involved in the process," added Jarbas.
Regarding investments, Jarbas recommends that companies do norway phone number list use short-term or working capital funds, even if they have funds for capital. The ideal is to spend a lot of time planning and finding a suitable source that is long-term and does not compromise working capital. “Often, what was a great opportunity turns into a nightmare. Every investment has a maturity period and the return does not always occur in the expected time.”
Another point of attention is companies that concentrate sales on a large client, since organizations that purchase in large volumes end up having access to more competitive prices, resulting in reduced margins and over time becoming a huge trap. Jarbas gave an example of good practice regarding the issue of sales, “I worked with a company that had 30% of its sales concentrated on one client, which required a lot of attention from the team. At a certain point, the organization decided to break with this client. This had a huge impact, but over time it proved to be the wisest decision, because it broke with this client that demanded a lot of time and attention from the factory and directed that production effort to smaller clients. As a result, it discovered that these smaller clients provided higher margins and did not demand as much from the production line. It is a difficult decision to reduce sales at first, but it was the decision that allowed the company to grow exponentially.”
In their day-to-day work, teams and managers need to fulfill their responsibilities, generate sales, paperwork, and fulfill their responsibilities to the bank. In these cases, it is also interesting to have an outsider's perspective. "There are cases in which the change in thinking came from someone from the outside, who takes a critical look without being too involved in the process," added Jarbas.