Young elephant feeding on unsold Christmas trees

The Challenge of Diversion of funds

It is that time of the year again when intense activities associated with Christmas beckon and soon everyone is in it. Those attractive offers on mobile phones, and never ending discounts on household items. Remember the trendy and fashionable clothing that suits you, particularly many who have to travel to their rural homes over the holidays. New arrivals for shoes and consumables that many cannot resist to fly along. Of course most firms especially retail stores maximize on this position to boost their sales before the close of the year.

First, a lot of people have regrets for missing out on all the financial resolutions they set up in the New Year. One was to save for a better and comfortable spot when it comes to a grand end year family gathering, because the last one, while enjoyable and well celebrated, you ended up borrowing to patch up in January. The second was to invest in some form of security for the future, a piece of land or some shares in a blue chip company. None of these have materialized.

But we are peculiar. We like new things. Why should you be seen by the village folks with the same dress you adorned last December during this visit? Why should you drive home the same car you did last time? In fact you would rather hire only for a number of days, maybe this time a 4WD and show what you are made of. You have progressed remember. Why should you appear with the same watch that you had last time, shoes, and the like? Remember this year, you have travelled far and wide, and picked a few items at the airports.

What we forget is that tomorrow we have school fees to pay. In fact our children have progressed to new classes where the fee is higher. The school principal has also introduced new levies in the name of school development and class tours. We forget the landlord who will demand their portion by the first week of January. We lose count of the daily bills that will not wait, food, water, electricity and communication. We forget that while we travel away from Nairobi for example, the tomato vendor has less sales and will hike prices in the New Year in the pretext of low supplies from the farm.

The biggest challenge many people face is diversion of funds. This could be for household needs that were not planned for, completely emerging. It is not just ladies who are involved in impulse buying like the myth goes, in fact the magnitude of this trait could be bigger for business people. Procuring new stocks meant for the festive season that do not move could harm the business.

The most effective way to deal with diversion of funds from purposes intended for is planning. This does not mean being rigid and not appreciating the fact that emerging needs arise. But at least an existing plan guides and helps reduce chances of great magnitudes of losing financial direction.

Secondly, save for holidays. A holiday is not an emergency according to financial experts. One can set aside small chunks of money on monthly basis and hit their target at the end of the period. Above all, always remember, the most prudent rule of finance is, spend what you have planned for.

Do you divert funds at the end of the year? Please share your experience with us in the comments below.

Zak Syengo


Zak Syengo is the Senior Manager Marketing & Communications

at Rafiki Microfinance Bank

angry black woman

Five Keys to Consider While Dealing With Suppliers

The other day I met with Wagaki at KICC, very confused. I had made my usual visits to the MICE facility to see what’s currently going on for exhibition. Being my good neighbor I was concerned to find her at the terraces, making frantic calls. I could only imagine something was wrong. Wagaki owns an events company, something she was doing as a hobby before resigning her prestigious banking and marketing position to take up on a full time basis. As the saying goes, before you know the way out of the forest, you will get lost, at least once.

On this particular day, she was preparing to stage an international celebration that a cabinet minister was attending the following day. The occasion would attract who is who in the creative industry. As usual, she had offered her young firm for the competitive job of putting together this event. The fact that Wagaki is new in the industry, she contracted a number of suppliers for the various components of the process, who all promised to deliver on time. She knew she had to give her best, because that could open more opportunities in future. She had gone ahead and paid full amounts for all the suppliers, particularly the outside caterer and another firm charged with décor and outlook. This was 3pm and none of the two suppliers could be reached. They had not given updates on work plans, had not started anything and of course were not on site. To make matters worse, she did not have any surplus financial resources to contract any other suppliers for the same jobs!

Many times, we get ourselves in such situations with suppliers in different businesses. Goods that were supposed to be supplied are not delivered on time, or maybe they are faulty. Work that was supposed to be done is lagging behind and the schedule is not updated. Quality of work is compromised in cost cutting to increase margins, missing out on the bigger picture of long term business relationship. Sometimes the mess is too much because it affects other relationships in the value chain.

How do we manage suppliers particularly in business setting? Below are five key ways to consider in a procurement process or prequalifying suppliers to engage in business.

1-Economics of Scale

Consider the fact that, the more goods you buy, the better pricing for most items, either locally manufactured or in case of importation. Most organisations plan well and procure goods at the beginning of the year to last for longer period, even a year. This has the downside of losing should there be a reduction on prices on the same goods later, and initially on cost on inventory. The merits however, exist in case of higher prices due to fluctuations of interest rates, foreign currencies and other factors as well as benefiting from economies of scale.

2-Preapproval of Works

This avoids delivery of substandard work, and standardisation across the network. It is very common for organisations that have branches and would want different suppliers originating from the regions where they operate to work with.

3-Down Payment

Consider paying a supplier a percentage of the total cost of procurement, and the final amount upon delivery and certification according to the agreed standards. This leaves a great lot of motivation for the supplier to comply fully.

4-Binding contracts

Contracts detail terms of service, payment, mode of delivery and timelines. They also explain the consequences for non-compliance. Contracts give a fallback position to your business and cushion you against any shocks that might affect you in case of delays or non-performance. It does not matter how small a tender is, insist on laid down terms, then your business is safe.

5-Background check

It is important to carry out independent checks on any supplier before engaging them. Firms with history of default, late delivery and poor customer service should be avoided, otherwise, you fall in the same trap and end up regretting.

Above all, planning still remains key in business so that a delay in delivering stock does not affect your customers. Remember the end customer holds keys to the success of your business.

What's your experience with suppliers? Please share with us in the comments below.

Zak Syengo


Zak Syengo is the Senior Manager Marketing & Communications

at Rafiki Microfinance Bank