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F1 analogy

Analogy between F1 sport and credit management

In essence these are two identical activities where similar aspects determine success.

The activities:

An F1 racing car that completes more circuits in the same amount of time, beats the others.
The creditor where the cash circulates the most, beats the others.

The aspects:

Streamlining processes and invoices, identifying the issues and times required to solve them, or making adjustments, anticipating requirements and limitations, determining the speed of the car and the speed at which the invoice is paid. 'Speed is the strategy' and the reward is cash.

 
F1 racing cars have to undergo very strict safety tests before they are allowed to participate in a race. Passing the test means that the car can technically complete the course. Taking part is justified. Driver and car are not going to have problems.   Customers are assessed on their creditworthiness. Being tested means that the customer and the supplier can both meet their obligations. Giving credit is justified. The customer is not going to have problems.
 
 
The streamlining helps combine maximum speed with minimum fuel consumption. The wind tunnel exposes unwanted wind resistance.
All unnecessary elements are removed from the car. The racing car slips through the wind.		   Price lists, conditions of delivery and invoices are all simplified.
Interpretations that could lead to payment delays are avoided. The invoice slips along the payment path with the minimum of resistance.
 
 
Every detail about the car is stored in a central database so that any structural problems are exposed and resolved. Links are made between incidents and variables based on analysis. Adjustments are introduced based on this knowledge and so the car ends up going even faster.   Every detail about the invoice and the customer is stored in a central database so that any structural problems are exposed and resolved. Links are made between incidents and variables using analysis. By applying this knowledge it's possible to make adjustments so that invoices are paid even faster.
 
 
All the information regarding the circuit and the racing car are stored in a central database. The car is tuned on the basis of this information and the driver harmonizes his driving style to match. This increases the speed of the car.   All the information regarding the invoices and customer payment behaviour is stored in a central database. Based on this information the software program is set up and the methods for dealing with the various customer groups is determined. The cash flows in faster without the accompaniment of disruptive friction.
 
 
The team is ready and knows what it has to do. Each one has their own task.   The team, customer service, sales logistics, finance and general management are ready and know precisely what happens to the invoice. Each one has their own task.
 
 
Tyres, aerofoils, fuel and software are all replaced in seconds. The identified problem is solved. Everybody works together towards the common goal: The car must get back out onto the circuit track as fast as possible. The man with the lollypop is in charge.   The problem highlighted is solved as fast as possible. All departments work together towards the common goal: allowing the invoice to get back on track as fast as possible towards payment. The CFO is in charge.
 
 
The battle is on. The person who controls all these aspect the best, is the fastest and therefore the winner.   The battle is on. Creditors who control all these aspects the best, are the first to be paid. He is the fastest and the winner.
 
 
The competitors fall behind. The aspects are not so well controlled. People end up becoming lapped by the winners. Pushing and forcing leads to taking higher risks. The car ends up in the gravel and is out of the race.   Invoices from other creditors are pushed aside and left unpaid. The aspects are not so well controlled. The relationship with the customer deteriorates visibly because of the pressure. Both cash and new orders dwindle.
 
 
The winner takes all. More laps of the circuit completed in the same amount of time. Lower costs and higher profits, time after time.   The winner takes all. More cash turnover in the same amount of time. Lower costs and higher profits, time after time.
 
 
The group effort is rewarded.   The results have been achieved. The group effort is rewarded.
 
 
The winner has completed each lap of the circuit faster and therefore more of them in the same amount of time.   The invoices have all been paid on time and before the invoices of other creditors. This way the winner's cash has made more laps of the circuit in the same amount of time.