Taking The Pulse of Your Business
I know, so many people are looking at bottom line, return on equity or worse sales to figure out if their business is doing well, I prefer the accounts receivables. What I’ve found after working for so many businesses in a wide variety of positions ranging from limited partner/new location founder to human resources/payroll, customer service and of course accounts receivables and accounts payables positions. Some were very well capitalized and others were just smartly funded.
What it came down to every single time was could they pull in the money and the best place to see that isn’t the bottom line! There are so many things that can be manipulated between the revenue and the net income that mask what is really going on. Take a good look at your receivables, here are 5 ways you can give your bottom line a boost:
1. Is your current advertising campaign increasing your sales volume?
2. Are your sales people (or website) just taking phone calls (mouse clicks) or are they able to really make a sale (just look at how much each transaction is bringing in)? (i.e. upsells, down sells, addon on sales whatever you want to call them)
3. Is your inventory doing anything for you? Do you need to focus what you carry in stock and get rid of some dead items.
4. Are you attracting the right kind of customers? (i.e. the kind that pay for starters but also the ones that come back)
5. Are you giving money away? Your accounts receivables are carrying out further than what is standard for your industry OR you are wasting money trying to collect a $1 service charge…
How in the world can your receivables tell you all of this?!? Because they are directly or indirectly connected to each of these areas and much more. If you would like to find out more check back I will be going into more detail on each of these areas.
