Ndubuisi Chidomere, founder and chief executive officer of Pamtech Oil and Gas, has urged suppliers to reduce dependence on single customers, suppliers, staff members and banks, and to tighten how they manage credit sales, saying both practices quietly erode profit in Nigerian businesses.
Chidomere said in a post on 2 September that a business which draws most of its revenue from one customer, sources everything it sells from one supplier, depends on one employee for critical information, or relies on one bank for funding, gives that party control over its "weather." He said businesses should build alternatives before they are needed, describing it as a survival strategy for the company, Pamtech Oil and Gas.
"Anything your business cannot afford to lose should never exist as only one," he said.
Chidomere also said revenue on paper does not always translate to cash in hand, describing a transaction in which his company supplied 10,000 litres of AGO at a landed cost of ₦1,750 per litre and invoiced a hotel customer ₦1,800 per litre on credit, a margin of ₦500,000. With the invoice still unpaid after almost 30 days, and AGO prices at some depots rising to about ₦1,950 per litre, he said the company would need an extra ₦1.5 million to replace the same volume of product once payment is eventually received. He said the case illustrated how a business can record a sale on paper while becoming worse off in practice, since the product has left the tank and the customer is using it while the money remains uncollected.
He said every business selling on credit should be able to identify who approved the credit, the customer's credit limit, the exact date payment is due, who is responsible for collecting it, and what happens if the date is missed. He added that companies should reward sales staff for cash collected rather than invoices raised, review unpaid invoices weekly, and stop supplying customers who have exceeded their agreed credit limit.
In a recent post, Chidomere referenced Aliko Dangote's progression from an idea to a company now completing one of the largest public share sales in African history, saying the example should prompt entrepreneurs to consider what problem they could solve at scale, rather than whether to apply for shares in the Dangote Refinery offer.
Dangote Petroleum Refinery and Petrochemicals FZE signed its IPO offer documents on 7 September. The offer comprises 4.1 billion ordinary shares priced at ₦525 each, with a subscription window running from 14 September to 13 October and a minimum application of 10 shares. The Securities and Exchange Commission has approved the offer, which targets gross proceeds of about ₦2.15 trillion. Aliko Dangote, president of Dangote Industries, said the offer was structured to broaden public ownership of the refinery.