A recurring battle for us is the struggle for sufficient credit for our dealers. We usually find a solution because we not only rely on credit insurers, but often also set our own limits. We frequently significantly increase the limits of credit insurers at our own risk.
If that does not work, we often find a creative solution, for example, the reseller does not have enough limit, but a great end customer does. While we do not do business with end users, we do charge the end user the agreed price at the request of the dealer, and then pay the margin to the dealer. True, he dealer will not have turnover in the books, but full profit and he loses the risk.
If turnover really needs to be in the books, it can also be arranged so that the end user pays us in trust. Yes, such a conversation with an end customer is dumb, but do not worry. If I have a great software solution, but am just a small company, then a large well-known end customer has understanding for such a solution. They are not hearing that for the first time.
Credit limits are important to us all, like the air we breathe. Unfortunately, some entrepreneurs do not even think about how to improve their creditworthiness. And that annoys me.
This mainly affects small companies that suddenly get a large order, and then quickly need a credit limit of 500,000 euros, although only a mere 20,000 euros of their business is capital stock. Sometimes one wonders why we should take more risk than the entrepreneurs themselves.
I often hear, »My end customer is the billionaire company John Q Public Inc., so they will definitely pay and then Jarltech will get its money.« Maybe. But if my dealer messes up or the end customer claims that the solution does not work as it should - than John Q Public Inc. simply does not pay. If the dealer has tight finances then things can quickly go bad, especially if you cannot wait three years for a Supreme Court decision with 100 expert opinions.
Perhaps it will help one or the other to hear how I, 25 years ago, unfortunately without any capital, started to build up and maintain the creditworthiness of Jarltech.
Each new balance sheet was sent to the well-known credit insurers and credit bureaus on the day of publication, fully transparent and with commentary. My banks, or as it was at the beginning only one, additionally received a monthly report with order numbers, plus some information about what kept us busy. Although no one had asked for it. This builds trust.
If you do not want to publicize numbers, you usually have something to hide. For the sentence »I do not give out any numbers, otherwise the competition will get them«, there is only one translation, which reads: »The numbers are too bad to show.«
Even those who have not studied business administration (to this day I have not seen a university from the inside) must understand what equity ratio is. And if this is only important on the balance sheet date, then I have to manage this key figure and not have an unusually high inventory on this day or drive a maximum credit line utilization, which unnecessarily drives up the total assets and screws up the debt ratio. Banks and insurers have their rating systems, even if they sometimes dont really fit.
What we also do: if we have profit carried forward in the company, which I cannot or do not want to distribute to myself anyway, then I can occasionally adjust the capital stock to the size of my company from the companys own funds. We just did it again in May. It just looks better and the bank knows that it is more difficult for the owner to run away with the money.
Another classic mistake is a reorganization. »We are so successful, we have just opened a new company especially for this area«. Yes, only then it is completely new and without any credit history, so for the time being it is not creditworthy. Unless a parent company is liable for it, in a way that everyone can see in the commercial register.
For our decisions at our own risk, it is true that the customer who puffs up the most (especially with regard to his million dollar limit with our competitors) usually walks on the sharpest razor blade. If you look at Google Earth for the credit decision and find only a garden shed at the address instead of the company headquarters shown on the website, then the case is quickly clear ...
However, I must also say that some credit insurers make funny decisions. Because there are not so many of them anymore, their power is simply very great. If an insurer suddenly sees an increased lump sum risk for an entire country or an entire industry, then one or the other innocent party may actually be affected.
As mentioned at the beginning, we almost always find a good and quick solution. Credit risks are part of a distributor's core business. But, we are not a venture capitalist. If a customer pays well, we are there quickly, at our own risk. And I am pleased that we are not bound by any ratings and are sometimes also allowed to make a gut decision, because people in our industry know each other.
Chatting with the CEO
Some CEOs never have time for anything – they are always busy, always stressed. That’s true, for the most part. But above all, a CEO needs to prioritise....
Some CEOs never have time for anything – they are always busy, always stressed. That’s true, for the most part. But above all, a CEO needs to prioritise. He needs to know what is important.
Ok, so what is important currently? To me, it’s important that I don’t lose touch with our customers. I want to know what challenges and chances we are facing. What do our customers need right now? How can we best support them? In which area could we improve?
That’s why I started the Jarltech CEO chat. Starting now, customers who are logged in to the webshop have the opportunity to chat with me. Of course, I will not be available all the time, but I will make time to be available on a regular basis, and as often as I can.
So, the next time you are logged in to our website and you see the chat symbol with my name on it, try it out for yourself! I look forward to chatting with you!
Europe 2025
Naturally, the current economic situation in Germany, as well as that in Europe, is heavily on my mind....
Naturally, the current economic situation in Germany, as well as that in Europe, is heavily on my mind. After all, I am a business owner who is responsible for 430 employees. What I am missing, however, is a clear political direction in terms of the economy. Does our European policy have any answers?
Let me put it this way: As a medium-sized entrepreneur in the year 2025, I have a plate full of challenges every day. We must constantly ask ourselves the question, how do we make our business even more sustainable? Sustainability has long since ceased to be a trend and has become something of a must.
Digitalisation is another hot topic. Whether that means automating processes, upgrading our IT infrastructure or sensibly implementing AI – you cannot afford to simply do nothing. At the same time though, we are struggling with heaps of bureaucracy. It would be so nice if the regulatory jungle would be streamlined a little, so that we do not need to battle mountains of paperwork each month. And no, I don’t mean in the sense of Elon Musk.
Then there is the matter of the skilled labour shortage. The demographic change is real, and it is beating down our labour market. On a European level we are discussing migration, but the discussion is (more or less) one-sided. It is an important discussion, but it must be comprehensive and not only conducted in a one-dimensional way. How do we deal with this change and how do we attract qualified specialists? This is a relevant factor in remaining competitive.
And, as you already know, we think outside the box: Geopolitical uncertainties and an ever-changing global playing field require us to remain flexible and agile. Whether it is retail, customs duties, energy prices or international conditions of competition – we must have Plan B ready to go – economy and politics together.
In short: Europe 2025 offers us many challenges but also enormous potential. European entrepreneurs want to lead the way and shape the future, but we need sensible framework conditions and planning security from politicians!
Complaining – the national pastime of the Germans
Let’s be honest, we Germans love to complain – about the weather, football, the economy, politics, etc....
Let’s be honest, we Germans love to complain – about the weather, football, the economy, politics, etc. This unites us all – regardless of our social class or political affiliation. Complaining is a national pastime in Germany. We love to grumble about high prices, the shortage of skilled workers and the weakening economy, while at the same time discussing our next holiday or the four-day week. Please don’t get me wrong, I am all for everyone taking a lot of time off and having a good rest – the only thing that bothers me is the fact that we love to see everything in such a gloomy light! We have to start working together to find solutions, because what we forget amidst all the moaning are our own abilities.
No, Germany is not falling apart! Germany still has a lot of untapped potential. We have people with great ideas, curious and inquisitive people (yes, even among Gen Z), a high average level of education, a high degree of legal certainty, a consistently strong industry, very good research ... and yes, we also have the capital. But we have to stop complaining and focus on our strengths. We are capable of innovation, we can be or remain market leaders in many areas, but, at the same time, we have to be open-minded. Even if one area collapses, we can successfully develop and expand a subsequent one. These are our strengths. However, we have to accept the challenge – be it in society, in politics or in the economy. Burying our heads in the sand won’t help us.
We are once again facing enormous opportunities for our future – whether in medical research, industry, the energy sector or, of course, across the board in the field of AI. And that’s just what comes to mind. There is, of course, much more. Let’s work together to develop new ideas that will advance us not only as a society, but also as a business location. There is potential out there, it just needs to be tapped! And by the way, we’ll have less reason to complain!
The road to success: do we really have to get worse at everything?
Last week I had a conversation with a customer that left me speechless....
Last week I had a conversation with a customer that left me speechless. Our sales department asked me to speak to a customer on the phone who doesn’t buy from us because we supposedly supply end customers.
No problem, I thought. I called and explained that this is exactly what we don’t do, and that this is a key promise to our dealers. There are extremely rare exceptions, – only if a vendor forces us to, or a retailer explicitly asks us to. But that almost never happens.
Then it turned out that there was a misunderstanding: the customer said that we also supply small retailers. My answer: »Yes, we do and we have to, based on our contracts with the vendors. Our competitors do that too.«
»All correct«, I hear, but then it got exciting: »Your large competitors are not interested in small customers, so they are poorly served. At Jarltech, the small dealers feel comfortable because you provide a great service.«
I didn't know whether to laugh or cry ... A customer doesn’t buy from us because our service is too good? I hadn’t expected that.
But don't worry, contrary to the headline: We will continue to endeavour to offer every customer the best service we can!