This work deals with the essential cohesion between all the departments of the company, but basically, it focuses on the interrelation of the financial risk department with the Commercial, Reception and Administration departments.
Efficiency in business management is often confused with good sales management, confusing the latter term with merchant production growth, avoiding that the true indicator of efficiency is production, demonstrating this is the central objective of this work, through the perfect interrelation that must exist between the mentioned departments.
A working methodology for prepaid agencies is outlined.
Economic rules are described for commercial management with contracted companies and new companies.
Finally, the documentary accounting relationship with the administration department is detailed.
SUMMARY
The present work treats on the essential cohesion between all the departments of the company, but in the fundamental thing, it is centered in the interrelation of the department of financial risk with the departments Commercial, Reception and Administration.
Usually one is confused the effectiveness in the enterprise management, with a good management of sales, confusing this last term with the growth mercantile production, avoiding that the true measuring indicator of efficiency is the made production, to demonstrate this is the central objective of this work, through the perfect interrelation that must exist between the mentioned departments.
A methodology of work for agencies with prepayment is outlined. Economic norms for the commercial management with companies are described to footpaths contracted and new companies. By I complete details the documentary countable relation with the administration department.
Given the importance of the issue of accounts receivable, and I would like to paraphrase the President of the BCC, Francisco Soberón, who metaphorizing the words of Che said that accounts receivable are to the economy what the slowest soldier to the guerilla, is that I dare to submit to your assessment, this analysis on the interrelation between the Risk department (Collections) and the Reception department of any hotel, with the aim of making the collection cycle as slow as possible, and thus allowing an acceleration of the economy.
Considering that the main objective of the risk department is to help build a wide and growing profitable sales base, this article demonstrates the relationship between this Department and the Commercial Department, which is, among other things, the sales manager. of the hotel.
The creative credit manager in the Hotels must be aware of all the external factors that affect the businesses of his clients (debtors), serve as a solid basis for discussions of trends that affect the Agencies with which they are contracted, as well as to analyze important decisions in credit policy, and provide a source of advice on important policy areas or decision that may affect the future welfare of these Agencies, and how this will affect the business relationship with them.
Of course, such actions by a credit manager reflect the ideal, and ideals must often address practical considerations of time and cost.
However, as these potential elements are realized, a credit manager will be able to make a significant contribution to his or her own business.
If the businesses of the contracted Agencies are profitable, the Hotel will also prosper.
Therefore, the credit function should be a primary consideration within the overall corporate strategy of the company.
From all the aforementioned, it is inferred the need for a link between the Risk and Commercial Department to grant or not credit to a client, based on the study that has previously been made of the solvency and guarantee of the same.
For this, the analysis focuses on two fundamental sections:
- Agencies with commercial relationship (with contract).Possible new agencies to hire.
Based on the previous sections, the following economic rules are developed:
- Norm of credit for Agencies with commercial relation. Norm of credit to establish commercial relation with other agencies. Norm of credit for Agencies with commercial relation:
This must be analyzed in joint coordination between the Risks, Reception and Commercial departments. Norm of credit for establish business relationship with new agencies (markets).
This should be analyzed in joint coordination between the Risk and Commercial departments.
If the company limited itself to granting credit only to the strongest clients, it would have few losses due to bad accounts and few expenses for operating a Risk department; but on the other hand, it would be losing sales and therefore lowering the level of occupation, which would mean a loss of profits much greater than the costs implicit in the extension of the credit necessary to make sales to weaker agencies.
Determining optimal credit standards involves equating the incremental costs associated with an active credit policy with the incremental profits from increased sales.
Hence the need for this analysis, which has a high qualitative component and the economic standard itself for quantitative valuation.
Subjective assessment - Qualitative analysis.
This is based on the study of the information available to the potential new client and which is obtained basically from:
1) Mercantile Registry - (Chamber of Commerce) - It is a public office, where individual merchants or businessmen and mercantile companies (Agencies) can be found in the books established for this purpose, with the dates, persons, minutes, and contracts that are registrable according to Law.
All companies are obliged to specify in their documents the identification data of their registration.
The data that can be found referenced are:
- Name. Share capital and bylaws. Name of administrators and auditors. Annual accounts. Management report.
2) Property Registry - It is also a public registry. Your inquiry is useful to verify the equity situation of the assets declared by a client.
This is of great importance, considering that through it you can assess the entity's means to settle its debts in the event of bankruptcy.
In it the following data can be obtained:
- Location of the property (s). Description and identification: extension, surface, delimitation. Circumstances of the acquisition: purchase, inheritance, acquisition value, date of acquisition. Name of the owner and circumstances of the property: shared with others holders, restrictions in the disposition of the same, existence of usufructs or easements, etc. Existence of mortgage charges.
3) Bank report - The client can provide the name of the credit institutions with which he usually operates.
Reports can be obtained from banking entities, especially in the sense of whether or not they would accept commercial paper issued to the informed party without putting restrictive conditions on it.
4) The ratio of unpaid acceptances (RAI) - The RAI is an internal order list between banks, which contains a nominal list of all the effects that, having been accepted in their form, have not been paid at maturity, nor to the claim in the term and form that the notary once demanded, and for this reason, they have been protested.
There are some commercial information publications that are published periodically:
1. New companies established with the expression of share capital.
2. Lawsuits with expression of the plaintiff, defendant and the amount object of the lawsuit.
3. List of companies that have submitted suspension of payments.
4. List of unpaid bills of exchange, with the name of the drawee, address of the drawee, name of the drawer, amount of the unpaid bill.
From the information obtained from any and / or all at the same time, as well as from any other source from which criteria about the potential client can be obtained, the evaluation of the same is elaborated, taking as a base a series of factors that Different authors classify them into four or five, but in this analysis we will maintain the traditional approach of the four factors, which professionals in this field call the four ECs of credit: character, capacity, capital, situation.
Character: refers to honesty, integrity, the spirit of fairness, and other human qualities that lead a customer to desire or attempt to pay for a purchase on the stipulated expiration date.
Although an evaluation of this characteristic can be obtained through personal interviews or through the data contained in the application, the most evident proof is given by the previous payment history of that same client.
Capacity: denotes the power or ability to meet the payment on the agreed date.
The data about the same comes fundamentally from the financial information of the potential client, and in particular of his income and periodic expenses.
In other words, the capacity is linked to the income statement. It also has to do with capacity the way in which the new obligation contracted by the client with the current purchase, will be treated in the set of financial obligations already existing in advance, and other credit purchases made by the client during the same period..
The financial statements provided by it or by financial information companies are the primary source of information in this regard.
Capital: it also has to do with the client's financial resources, but refers in particular to its financial support, in the event that the capacity turns out to be inadequate in the end.
It is measured by the value of its assets, or more precisely by its own funds. In other words, it is closely related to balance.
Here it is necessary to make an important distinction between consumer credit and business credit, since the former in most cases have little equity with which the company can recover from an unpaid invoice.
Financial statements are a source of basic information.
Conjuncture: refers to the political and economic environment in which the decision on the granting of credit is made.
The potential customer has no ability to control this last factor. Although conditions at the national level may offer some useful perspective, the customer loan officer should pay particular attention to the local situation.
In the case of credit to companies, as is the case at hand, the focus will normally be on the current situation in the sector of activity that the potential client operates.
Quantitative valuation - Credit standard.
Once the qualitative analysis has been completed, and provided that the information necessary to calculate the credit standard is available, it must proceed to determine whether it is economically efficient, establishing relationships with the potential client.
Steps to calculate the Credit Rule:
1. Calculation of the sales budget of the new Agency.
2. Calculation of the sales budget of the new Agency by days. (/365 days)
3. Calculation of the liquidity reported by the new Agency. (X expected collection period)
4. Calculation of the expense budget for this Agency.
5. Calculation of the budget of expenses for this Agency by days.
6. Calculation of the economic standard. (-)> 0
As you can see, the credit standard itself (economic normal), expresses the profitability that the new relationship presupposes, the higher this is, the more favorable it will be to establish relationships with the new client.
To support the analysis, it must be assisted with the step, which offers a projection of the increase in liquidity that the potential client will report.
If the use of these rules for contracting is complied with, the Risk Department would fulfill its function of Quality Filter, as reflected in the following scheme:
Finally, the effectiveness of the Risk Department's work can be measured through the following indicators:
- Average collection days. Debt composition by age. Cost management ratio of Collections = Management expenses / Collections for the period.
If each hotel and / or company were able to implement and ensure compliance with these standards, it will surely decrease its collection cycle, and achieve an accelerated and safe reproduction process.
