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The customer king dictatorship, myth or reality in the age of globalization.

The customer king dictatorship, myth or reality in the age of globalization.

 

The customer king. Everyone knows this adage! Its fame precedes it, to the point that it is like a golden rule for any good business. This simple sentence summarizes the implication it would take to retain consumers.

If we look at it from the point of view of the user, this adage the customer king suffers from numerous shortcomings, especially when the market is dominated by a few suppliers who find themselves in a situation of virtual monopoly. Who has not found himself in an ubiquitous situation when he must try to explain his problem to a telecommunications operator, a household water supply company or any other company which employs thousands of employees and whose rules are dictated by reporting and hunting down the costs of management controllers?

Is the customer king when after having renewed several times his call to a digital switchboard which indicates to us in a synthetic voice that the waiting time is more than 10 minutes and that it is necessary to think of renewing his call , then which forces us to dial different numbers on the keypad of our phone and that after endless waiting to the sound of heady music going on in loop we arrive at the station of an operator who very often is at halfway around the world and we are at the end of 5 minutes of conversation in front of the following answer “I could not solve your problem but I am not allowed to stay longer with you online. ” That speaks for itself. To believe that for these large companies the customer is no longer the king but is a simple adjustment variable in the operating account.

On the other hand, and in spite of their gigantism it seems that the GAFA are much better organized to put the customer king at the centre of their concerns.

At the other end of the scale, the small craftsman and the small business are subject to the dictatorship of their king customers because they do not have an administrative organization which would allow them to put objectivity in their approach to the customer.

For medium-sized companies, the concept of customer king may be a dictatorship with unexpected consequences. For many years, business leaders have gotten into the habit of giving precedence to the salesperson, placing less importance on administration, management control and profitability. It would also be relevant to talk about the turnover dictatorship. The entire decision-making chain (bank, manager, shareholders) has priority on eyes on turnover and profit. Few medium-sized organizations, especially in export services, will analyse the difference between the customer king and profitable turnover.

When you deal with client risk management, when you are a credit manager, you see the abuse of the customer king system every day. Such customers have always paid their invoices more than 6 months late. However, it still pays. This client will continue to use and abuse the system the customer is king. He will not be blocked; his goods will be delivered to him. Nobody will take the time to analyse the costs generated by this type of behaviour because they are not always apparent. For example, the man time necessary to follow up on these problem customers, the consequences on the cash flow of the incessant postponements, the additional costs such as the financing of the VAT for 6 months instead of 30 days etc.

It is of course necessary to put the customer at the centre of his project but the one who is profitable and the specialist in all kinds of abuse is certainly not profitable.

The customer king’s dictatorship is similar to that of the short term. In the business world, time is of the essence. Many entrepreneurs would be amazed at how quickly a little more rigor in customer management would improve the operating account.

It is not possible to let accountants and financiers decide the fate of clients on their own. We need a real credit manager who will arbitrate between the interests of the commercial and those of the administrative.

But this credit manager must have real decision-making power so that the customer king client, which is a concept to be nurtured, does not turn into a dictatorship.

Who pays debt recovery costs in Europe

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Who pays debt recovery costs in Europe In Germany the debt recovery costs charged to private or professional debtors are fixed by law. The list of debt recovery costs is detailed by the legislator, which goes as far as quantifying the amounts that can be claimed for a simple reminder letter. This is a major difference between France and Germany, France going so far as to prohibit the recovery of individuals. The German Federal Ministry of Justice and Consumer Protection wants to reduce debt recovery costs by 50% with a new draft “law to improve consumer protection in collection costs”. German professionals are “upwind” against this reform, their arguments being presented below. This reduction in debt collection costs would affect not only debt collection agencies and lawyers, but also creditors facing higher costs. According to the recovery professionals, this would be a reversal of the polluter-pays principle. Typically, two to six months elapse between receiving and closing a file. And in cases where a trial becomes inevitable, the handling of the case will take three to six yearsThe objective remains to recover the claim amicably. In this regard, even before the first reminder letter, many test steps, data comparisons and solvency checks are performed. On this basis, an individualized debt recovery strategy in relation to the debtor’s situation is determined. In this way, recovery professionals can decide, through which communication, how often and for what purpose, to manage this file. The German project stipulates that consumers will only be required to pay the debt recovery costs of a collection service provider or a lawyer if they have been informed in time. The project would impose the information of the debtor by an undeniable and proven action of the financial risks it incurs if it does not pay its bills. The decrease in the recovery costs payable would result in a profound change in the profitability of the German debt collection services. For the German recovery professional’s two possibilities open up to them: either the collection service providers reduce the scope of their activities by adapting them to their revenue prospects. Or the creditors bear part of the costs of the collection service. For the Germans it is a reversal of the polluter-pays principle. Because it is not the creditor who misbehaved, but the debtor, and this one, should pay for his bad behaviour. The Germans also want to differentiate between private and commercial debtors. Late payments in companies must be as low as possible. In order to achieve this objective, the German legal system is expected to inflict serious legal consequences on debtor companies that do not respect their commitments. In general, the German collection professionals ask that we move away from the flat-rate collection costs and replace it with a gradation of these costs related to the difficulty of collection. The problem of recovering unpaid bills is a hot topic in all developed countries. Very often individuals are protected and for companies the commercial relationship that we are trying to maintain is a real obstacle to rigorous practices in terms of debt recovery costs. Prevention is one of the first levels to be used to first make every effort to ensure that payment delays are reduced to the minimum. The development of digital and new means of payment will certainly change the situation by significantly reducing outstanding payments. However, it is indisputable that we must penalize the bad coaters and the professional latecomers who use and abuse supplier credit. Finally, it is up to the legislator to put in place simple and inexpensive judicial systems and procedures to sanction bad faith behaviour. It is absolutely abnormal that in very many cases no proceedings are initiated because the costs to be incurred are disproportionate to the unpaid claim. The professionals of bad faith are perfectly informed. Georges Vonfelt GEVO