My father has a dry goods business. But one time, he tried to engage in a small scale money lending. Small scale because the maximum amount he allowed to be loan is P2,000. His client were mostly supermarket vendors. Here is the business system. Every 3 pm, the store clerk that was assigned to my dad's money lending transaction would leave the store and proceed to the vendors. She will bring some cash and ledgers. The next morning, she would then have the names of the borrowers and the amount they borrowed. Collection was done everyday. No credit investigation and no further verification about the borrowers background. This went on for about how many months. Many loan releases but minimal collection. The store manager then started to question the clerk who is doing the lending transaction. She explained that she can no longer locate some of the vendors that is why their is minimal collection. This was investigated and it turns out nobody knows anybody. It looks like the names were just fabricated. And the money? Charge to experience and considered as losses.
Lesson: Before you engage in any business, be sure to establish a system that will protect your investment.
Subscribe to:
Post Comments (Atom)
0 comments
Post a Comment