How to Weather Financial Woes in Thailand
Thailand was deemed the “darling” of journalists and economists from 1986 until the 1997 Asian financial crisis. Before the crash, Thailand's economy was one of the fastest growing economies worldwide. Foreign investment in Thailand flourished, but the economic boom could not (and did not) go on forever.
The collapse of the Thai baht forced the Thai government to float the currency. Thailand was broke with the economic slump spreading to other ASEAN countries. To help these countries recover, the International Monetary Fund (IMF) released about USD 40 billion to help stabilize the currencies of the hardest hit countries including Thailand. By 1999, the Thai economy was well on its way to recovery.
The 2008 global financial crisis effect on Thailand was not as massive. The stock market was affected as the crisis was global but the Thai financial system was minimally affected; however, the crisis indirectly affected the trade sector particularly the export industry.
Thailand: 2014 Economy
The political unrest that started in October 2013, has adversely affected the Thai market. The economic growth forecasted by the Bank of Thailand for the first quarter of 2014 was down to 2.7% from 4.8%. The governing body's mandate is limited and any project that needs a sizeable amount of money (in trillion Baht) is prohibited by the caretaker government. The undertakings of the caretaker government are made more difficult due to anti-government protesters.
The growth of government consumption went down to 3% from 11%; investment by the government went down to 7% from 1.7% whereas there is no growth in private consumption. Private investment was predicted a growth of 9%, but with the current political situation, there is the possibility of zero growth.
Hurdling Business Financial Woes
The Thai caretaker government has adopted a stimulus package to help low-income group population liven up and raise local consumer spending in the second quarter of 2014. The export industry is experiencing a drop in demand that it is imperative to increase the spending power of the population.
In connection, there is a need to really push the export industry as it is one of the major lifelines of the Thai economy. A study done by Worasinchai, Lugkana; Thanapob, Dechanan; Daneshgar, Farhad titled: Survival strategies of Asian exporters during an economic downturn: case of Thailand (http://www.freepatentsonline.com/article/International-Journal-Business-Strategy/237533589.html) concluded that exporters embraced a prop up on the level of production efficiency control and cost-reduction practices to weather financial woes in Thailand including possible fluctuations in foreign exchange.
Enterprises that have long periods of operations leaned towards penetration of new markets while businesses with short periods of operation use value added and pricing strategies.
Sourcing for new countries to export Thai products and services is a prime consideration. Giving more attention to the local market and consumers can help boost sales. The Thai caretaker government probably had this in mind when they decided to implement the stimulus package for the low-income Thai population.
Lastly, the study concluded that exporters should consider transactions in other currencies.
Improving Business Cashflow
Big and small enterprises experience a cashlfow shortage during a financial downturn. Here are some practical tips to improve your business cash flow.
Bill your customers promptly and on a regular basis. You can send invoices through courier or through email. Once the goods are dispatched to the customer, send the bill immediately.
Improve the business's collection system. Before you give your customer a credit line, make sure you have the pertinent details regarding him/her.
Do you have a debt collection strategy and applicable methods to address disputes and queries? The emphasis here is not to speed up the collection, but improve customer service which in turn lead to customer-satisfaction and ultimately to quick bill payment.
Implement an easy payment system and scheme. Make sure your customers have different options of payment - credit card, debit card, cash, check, wire transfer, bank deposits and more.
Consider your credit terms. If cash flow is a problem, consider your suppliers' terms against your customer terms. If you have to pay your suppliers every 30 days, whereas you can only collect payments from customers every 45 days, then there are 15 days that there is no money in the cash register. This is a problem unless you have additional running capital. You also have to take care of salaries and utilities.
It goes without saying that your employees must also have the dedication and tenacity to invoice and collect from customers. See to it that the general office system is current and workable to keep all customer records in order.
There are more ways to survive a financial slump and there is no harm in trying new ways.
Have you considered a serviced office or virtual office for your company? These options are great ideas to cut-cost for your business. Contact Servcorp now!