When you bill 4.5 million but insolvencies wear you down

And you work 60 hours/week for increasingly tight margins

Do you recognize this situation?

• Beverage wholesale, solid revenue but tight margins
  
• Many employees and collaborators, too many weekly hours
  
• Meager profit compared to volume moved
  
• Ideal client: evolved pizzerias with tap system and wine list
  
• Main concern: client insolvencies that devour you
  
• Goal: zero insolvencies, reduce hours, maintain/increase margin
  

And the fear is: insolvencies that erode margin until zeroing it

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The trap of volume without protected margin

The numbers seem important.

Solid revenue.
Several employees and collaborators.
Moderate but constant growth.

You're a serious beverage operator:
Not multinational, but relevant local player.
Personalized service, deep range, flexibility.

But there's a problem killing you: insolvencies.

Clients who don't pay.
Pizzerias that close with open debts.
Restaurants that "will pay next week" (and never do).

And you:
Work too many weekly hours.
Manage problematic personnel.
Have very tight net margin compared to volume.

Personal goal: reduce hours but maintain income. Cash flow is your daily nightmare.

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What happens when insolvencies wear you down

On the economic front:
Important revenue but how much actually collected?
Insolvencies eroding already low margins.
Working capital blocked in uncollectible credits.
Must advance suppliers but clients don't pay.
Medium-term debts to manage.

Cash flow perpetually tense.

On the operational front:
Too many weekly hours: half operations, half chasing payments.
Complicated personnel management with many employees.
Grueling hours but not to produce, to patch up.

Energy spent chasing credits instead of developing business.

On the commercial front:
Clear ideal client: evolved, professional pizzeria.
But in reality you also take risky clients to make volume.
Competitive pressure: multinationals push you on price.

You win on service/flexibility but these don't monetize if you don't collect.

On the strategic front:
Growth blocked: every new client = new insolvency risk.
Margin under pressure: competition + insolvencies.
Goal maintain margin (not increase) = already difficult.

Impossible to scale if model doesn't protect cash flow.

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Why it happens

You built a volume-driven instead of margin-protected business.

In beverage wholesale the classic logic is:
"The more you bill, the more you earn."

But this only works if you actually collect.

You probably have:

• Accepted clients with low credit scoring to make volume
• Payment delays too long
• Fear of losing clients if you tighten conditions
• No automatic blocking system for delinquent suppliers

And multinational competitors?
They can afford insolvencies (enormous volumes).
You can't.

Solid revenue but tight margin.

Just a small percentage of insolvencies to zero profit.

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The (wrong) path many try

Apparent solution: "I hire someone to chase credits"

But the problem isn't who chases.
It's that you shouldn't have to chase.

Prevention is needed, not cure.

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The method

No longer chase credits. Prevent insolvencies. Rigorous credit scoring from the start.

Every new client: check before serving.
Internal scoring: payment history, reports, sector.
Risky clients: only cash or substantial advance.

Say "no" to unreliable clients even if losing volume. Stringent payment conditions.

Not excessive standard delays.
But rapid payments with incentives.
Delay beyond threshold = automatic block on new supplies.

No sentimental exceptions: business is business. Factoring or credit insurance.

Sell credits to factor (contained cost but zero risk).
Or commercial credit insurance.
Cost lower than benefit if it zeros insolvencies.

Immediate cash flow, zero stress. Client portfolio: quality above quantity.

Current analysis: how much revenue from problematic clients?
Surgical cut: eliminate least reliable part of portfolio.
Focus on evolved pizzerias (ideal target) that pay.

Better lower but clean revenue than high volume with insolvencies. Credit management automation.

Management software with automatic alerts.
Automatic reminders at maturity.
Daily dashboard: aging credits, DSO.

Dedicated personnel only for prevention, not chase.

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What changes after

You no longer chase payments.

Clients pay because the system forces them (or they're not served).
Insolvencies drop drastically.
Net margin increases significantly.

And you:
Hours reduced by many weekly hours (freed from credit stress).
Same income (actually, higher due to fewer insolvencies).
Personal balance finally possible.

Energy for strategy, not patching up.

You no longer manage a company making volume.
You manage a company that generates cash.

This is the turning point: when you stop chasing and start selecting.