Righting the Ship to Ensure Operational Fitness

Posted by Randy Harrod on Sep 29th, 2009 | 1 comment home title

So what can you do, especially in a soft economy, if you find yourself with lots of cash tied up in operating capital to run the business?

First, get serious about tracking each sub-category and assign responsibility to gatekeepers with goals to enhance performance by improving the number of ‘days’ of each type of operating capital.

• Meet face-to-face to resolve issues with major slow payers, and revamp your practices such as:
o assign interest charges on past due accounts
o improve your credit approval process for new and existing accounts
o provide incentives for immediate payment, and refine pricing methods

• Issue invoices more quickly and find ways to collect more upfront, perhaps by using credit/debit card processing or instituting progress payments to fund out-of-pocket project commitments.

• Keep supplier payables at conventional 30-60 day levels, even while insisting on improved lead-times, just in time delivery, and impeccable quality to help improve your operating performance.

• Challenge the need for on-hand inventories and operating supplies (beyond what’s needed for this week), and get creative with your suppliers in rethinking re-supply and customer delivery routines.

• Ask suppliers to help with your excess inventory by repurchasing/restocking your surplus items in return for long-term commitments.

• Reassess the amount of floor space required for a tight operation as well as the weekly hours of ‘duty time’ for your fixed assets. Perhaps you can shed fixed cost by subletting surplus space, capacity or expert staff services.

One Response home title

Anonymous says:

October 23, 2009 at 4:12 pm

Righting the Ship to Ensure Operational Fitness: So what can you do, especially in a soft economy, if you find .. http://bit.ly/2KAPtR

[Original tweet, Topsy page]