16 December 2013

Debt management

Most of the time, if we focus on business development plan, we may require a significant amount to support the working capital as well as CAPEX plan. To execute it well, we may sometime extend loan to customers by introducing longer receivable time as well as obtaining higher debts from banks. 

In normal circumstance, we may face positive & negative impacts on the debt management planning. We may not need higher equity demands as we can ride on the debts from banks to support our expansion strategy without diluting equity earning per shares. We may also obtain higher revenue by allowing customers to pay us in longer period, and let them to grow their business together with us. 

Of cause there is a risk in it. We may end up increasing bad debt ratio together with the increased interest rate. We may also face higher interest rate during the bad time. To combat with this, a cautious yet detailed execution planning is needed. 

Sometime, I believe that to make suppliers & customers success together is part of our business / jobs. And we could further increase the profit together in the same ecosystem. Win-win strategy is always a better strategy. 

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