In the article, For Good Measure: Know How to Take Your Company’s Vital Statistics, the author Crystal Detamore-Rodman recommends routinely analyzing the ratio between assets and liabilities to assess the growth of a company (Rodman, 2007). The profit and loss statement is instrumental in determining which direction the business’s cash is flowing. However, Rodman states the “cash-flow analysis is just a start.” (Rodman, 2007) Offering incentives to the slow paying customers may encourage them to pay quicker (Rodman, 2007). Providing excellent service to the profitable customers and firing the slow paying, non-profitable ones develops a more positive cash flow (Rodman, 2007). If a company has a limited supply of technicians, and an ever-growing customer base, the technicians may not be able to provide the excellent service customers expect. It may be a good idea to determine how many customers one technician can successfully service and limit the technician to that specified amount.
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Questions About Reporting, Business Analytics, or Fixed Assets?
In the article, In a Pinch, the author C. J. Prince discusses the different paths a business
can take to increase cash flow. Prince suggests that every business should operate with a pay-in-advance set of terms (Prince, 2008). Understandably, this is not always possible for every business. The main goal for any company is to have as many clients on the pay-in-advance model as possible. When changing the payment terms to reduce
the credit advance, it is always wise to be upfront about the change with the customer (Prince, 2008). If a customer is refusing to accept your terms and continually pays invoices after the due date, consider dropping them as a customer (Prince, 2008). Also, Prince recommends investigating a new company prior to extending a line of credit (Prince, 2008).
In the article, Mystery Solved: How to Fix Cash-Flow Problems, the author Norm Brodsky discusses the need to understand and practice the ba
sic business knowledge that helps to pinpoint cash flow issues (Brodsky, 2009). He suggests the basics are; accounts receivables, surplus inventory, bad debt, overhead and gross margins (Brodsky, 2009). The author recommends analyzing each customer’s account
to ensure there is room for profit. If a customer is costing money, rather than making the business money, then there needs
to be a renegotiation of price. If the customer fights the renegotiation, it would be better to drop the customer than to go out of business in the near future. If a customer does not make the business money, it just does not make business sense.
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