Page 47 - Countertrade

d) The financial affairs of the business being brought under control

Between 1989 and 1995 the customer base fell by 25 per cent. The level

of customer default increased markedly. The government solution was a
decree, in 1993/94, requiring enterprises (industrial customers) to pay in
advance for finished products. Unfortunately, few enterprises were in a
position to do this. For Enterprise 13 this meant that it had to extend
credit to good customers and establish account chasing as a vital
operating function.

Bad debts became a major feature of business life. In 1994 a further
government decree allowed debts outstanding for more than three
months to be written off against profits. The debt was effectively
transferred to the government.

In 1994 turnover was 912 million roubles. The profit on individual

products varied but overall was approximately 42 per cent. Losses on
stockpiling of products amounted to over 450 million roubles.

STOCK TURNOVER

days

1993 47
1994 86

In 1994 for the whole of the VOS enterprises there was approximately 43
billion roubles tied-up stock of unsold goods. In this same year some 500
new products were introduced in an attempt to create business to replace
the previously guaranteed state enterprise orders.

Prior to 1993 Enterprise 13 could have expected between 74 and 76 per
cent of its output to go to that enterprises. At the end of 1994 this figure
had fallen to 25 per cent.