Spotlight on credit risk issues in food sector
Dubai, February 2, 2014
Leading business leaders discussed key credit risk and debt collection issues within the UAE food processing and manufacturing industry at the Citi Roundtable held in Dubai recently.
The roundtable on working capital again managed to spark lively debate on regional challenges and solutions with security and education taking centre stage.
The event held at the Oberoi Hotel was attended by a representative selection of business leaders from the food processing and manufacturing sector. The session was chaired and moderated by UAE Credit Management expert Andy Yiacoumi, a partner with Credit Management Institute Middle East.
Many points of view were floated on the different aspects of managing the cash cycle and the perceived power of the customer and how to mitigate and protect the company cash flow, said the organisers, Accountant Middle East magazine.
Although many used post-dated cheques there was scepticism over their security especially when figures were quoted on the number of dishonoured cheques in 2012. This being a staggering 29 million cheques in the UAE totalling close to Dh50 billion of failed "security", they stated.
Some used Letters of Credit with great success offsetting the associated costs. In common with 98 per cent of the business community in the UAE only one out of the group was considering insuring their debts.
A position that is changing within the region as did the consensus of the group during the debates that followed, said the organisers.
The business leaders called for greater dialogue and communication. "This was a common theme. Not just with the customer but within the industry itself. Competitors within the industry need to sometimes work together. That way common customers can be educated."
Andy Yiacoumi, who chaired the session, too raised many points including the need for a structured policy on credit, how to assess a potential new client, manage the business cycle and also how to react when there are problems with collection.
"Some of the delegates had a clear process in place but many did not and were facing problems when issues arise with settlement. It was evident that the clients were in control rather than the supplier offering the credit terms. We must not forget that the suppliers are providing a free credit facility," said Andy.
This is something that needs to be handled and managed effectively. Clients cannot be allowed to dictate and change the agreed terms as and when it suits them, he added.-TradeArabia News Service