To Pay or Not To Pay: Money Mangement and Logistics

Written By:

Published On:

August 5, 2014

Post Categories

Photo credit:

Photo credit:

The nation recently received the grim announcement that county operations were likely to grind to a painful halt soon as a law meant to release about KES.200 billion to county governments had been delayed by MPs. Effectively, salaries and much needed funds meant to be funneled to medical services had not been released yet, so staff and citizens would have to go without until the situation was remedied from above, with the finger being pointed at parliament for the massive lapse.

One of the first casualties of poor financial planning is usually the employee payroll. When organizations run out of funds due to poor anticipation of needs, employee salaries will usually go unpaid. You will recognize this as the fastest way to destroy employee morale and plunge the company into an even more unfortunate situation. Dissatisfied employees are not likely to be performing at their best standard, leading to an under performance of the company in general, reducing earning potential. Worse yet, employees may be motivated to protest their conditions with go slows, strikes or simply quitting their jobs: after all, no one wants to work for free.

Logistics companies with poor financial management practices will also not be able to pay off their debts when they are due. Most businesses safely operate with a certain amount of debt that is gradually paid off: be it debts to suppliers, contractors, bank loans and so forth. When assets and finances are improperly managed, supply chain management firms are likely to miss their scheduled payments and incur a loss of good will with their creditors. This has a possibility to escalate long term into an ugly situation where assets must be repossessed to help settle debts. For a logistics firm, this can include vehicle fleets, packing machinery, basic office equipment and so on.

Photo credit: Geralt/Pixabay

Photo credit: Geralt/Pixabay

Lack of proper financial management also means inputs that would help in the carrying out of business cannot be purchased, leading to a slow down or ultimate halt of operations for the logistics firm. Here, basic supplies such as fuel for fleets, spare parts for machinery, employee safety gear that needs replacing and even down to the bone items like office stationery or software and systems maintenance can suffer. Without these and more vital inputs, the supply chain managers business continues to suffer, losing income and getting further and further away from being able to pay off their debts.

The importance of financial planning and management cannot be overstated. With financial planner services available and a wealth of information existing on the internet, we surely have no excuse for having financial issues whose solution lies within our power. As a business person, it is our duty to recognize that external forces can interfere with our carefully laid plans and have back ups just in case the situation should occur: if the company returns a loss for this month, will you still be able to pay your employees and suppliers? If the answer is “no”, perhaps it’s time to contact a professional, no? How do you make sure your finances are well managed? Let us know in the comments and have yourself a lovely, financially responsible week.


Submit a Comment

Your email address will not be published. Required fields are marked *