Lane on…Got Cash?
May 25, 2011
We’ve had inquiries from a few of our clients lately about cash. Some because, as they start growing again, they need to finance inventories or delayed improvements. Others are experiencing downturn and need margin for error to recover from mishaps like the loss of a customer, storm damage, etc. These are challenges they have faced before and can overcome, provided the temporary cash pinch doesn’t prove debilitating. Here are some areas to investigate and ideas to try if you find yourself in the same situation:
- Payment timing – are you using the time allowed or paying right away?
- Terms – are you getting the terms offered? … or paying extra by missing terms?
- Rebates – are there year end rebates or incentives that you are missing?
- Not all customers are created equal – some pay and some are notorious for not paying. Consider a push for customers in industries/segments that pay better than others.
- Payment timing – the obverse side of the vendor payment timing issue
- Terms – do they adequately incentivize customers to deliver the cash timely?
- Rebates -are you measuring rebate performance with respect to your customers?
- Price leaks – this very fruitful area (2% of revenue to the bottom line) for EVERY business that has not recently been through a serious pricing performance assessment. Click here to read several different Redbank pricing articles.
Products and Services
- Recurring and predictable -consider a push into product or service lines where payment is quick on a routine basis like a subscription or routine service.
- Different should cost more – Charge differentially for services that create more value, or if you have a preferred or highly differentiated position. Click here for a case study.
- Take a hard look at travel and office expenditures. Since the crisis feels like it’s passed, some management teams have turned their focus to returning to growth and have temporarily taken their eye off the cost of things. Now might be a good time to review those line items again.
This entry was posted in Lane On and tagged Accounting. Bookmark the permalink.