Tag Archives: Systems

BizVidya Guide: Create a Business Dashboard

A Business Dashboard is a single point, One-Integrated-View of the whole Business seen in Execution.

There are many Dashboard Solutions out there in the technology market and choosing among them is another discussion altogether.

At a fundamental level, what is more interesting is that a Business Dashboard can be used as a Tool to derive the Most Critical Measures that you MUST track in real-time to steer your business smoothly without any hiccups on a day-to-day basis.

Designing your Business Dashboard even on a piece of paper provokes a business owner to ask him/herself:

What do I need to know about my business, NOW, at this very moment?

For example:

  • Are all Pending Sales Enquiries being responded to proactively? Which enquiries are STUCK?
  • Have all Pending Sales Orders been scheduled to deliver across the entire supply chain (suppliers, transporters, warehouses, etc)? Where are the DELAYS?
  • Is my Accounts Departments taking care of all Legal Compliance Issues well in time? Is there a likelihood of penalty anywhere (especially, if it has already happened in the past)?
  • How effective is my Purchase Department? Are we taking all possible discounts? How much did we save in our purchases over the last month? Are we paying higher than the market rate? Are there new suppliers in the market who are offering the required quality at better rates?
  • Is my Production on Schedule? Are Raw Materials adequately stocked? Is regular Maintenance being for done for all machines (especially, if there is history of breakdowns)?
  • What is the percentage of Unplanned Absence (including unexpected ‘falling sick’) by staff? In which departments? How has such absence hampered work? During such absence, has the backup staff reported progress on all critical parameters?
  • Which customers are consistently paying late? Why? Is the follow-up adequate? Is the follow-up log being sent to you without your asking for it?

Each business owner will have his/her Pain & Gain Areas! Where do you want to focus now? How can Technology help you in this? Can a technology solution help you if you have not done your homework?

It is a great idea to start with a Pencil and Paper! List what all you would like to see on single A4-size sheet. You may have to fill many sheets before you get your “One-Integrated-View of the whole Business”.

Then, perhaps you may move on to spreadsheets before finally experimenting with state-of-the-art tools.

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BizVidya Guide: Reduce your Days Sales Outstandings

accounts-receivables2

Days Sales Outstanding (DSO) is your company’s average collection period.

The smaller this number, the faster you are in collecting money from clients.

[For the mathematically inclined, a more accurate measure of your Collection Department’s performance is the Percentage of Overdue Amount (monies beyond due date) to Total Due Amount (Total uncollected amount including fresh sales) – also, known as Days Delinquent Sales Outstanding (DDSO). See Advantage of using DDSO to measure the effectiveness of the credit department (http://www.encyclopediaofcredit.com/WebHelp/articles/risk_analysis/art730.htm )].

Depending on the nature of your business (for example, number of transactions, customer profiles, and competition), you may choose from a variety of strategies and tactics to reduce your Accounts Receivables Average.

Tip #1: Re-evaluate your Credit Sales Policy

 

Why are you selling on Credit? Why not Sell ‘Cash’?

Sell ‘Cash’! On Zero Days Credit! Even better, see how you can collect advance before delivering a product or a service.

Yes, you heard it right!

Question your product/service/marketing strategy – why are you selling on credit, at all?

Take a fresh look at your product/service basket and market segments.

Perhaps, you can identify products/geographical regions where customer will willingly/happily pay cash. This could be because your product or service is tightly coupled with (and/or is essential to) the customer’s workflow and you can create an edge over competitors due to stock availability, location, price, etc.

Create a marketing/selling strategy on how you can channel adequate energies and resources on finding and selling in those areas (Location/Features/Price) where customers will easily pay cash.

Tip #2: Create/Modify/Implement a New Credit Policy which helps you plug cash flow leaks

If you do not have a Credit Policy, create it to achieve clarity and consistency in giving credit to your customers.

If you already have a Credit Policy, revamp it to take advantage of changing market conditions.

Once you have an up-to-date Credit Policy, implement it with rigor and discipline. Make someone accountable to track Credit Policy deviations.

Tip #3: Have a New Customer Policy, Customer Retention Policy & Customer Firing Policy

Don’t do business with any and everyone. Do background checks before committing transaction with a new customer. Identify and give higher priority to faster paying customers. Fire your low-value slow paying customers.

Tip #3: Streamline Your Collections Process

 

  • Insist on having your collection follow-up process move with clock work precision.
  • Based on Due Date of Outstanding, schedule the escalation process – Emails, SMS, Calls, Visits and Legal Recourse.
  • Ensure that the monitoring team regular sends New Customer Verification Reports, Credit Policy Deviation Alerts, and alerts on payment variations and disputes.

Tip #4: Update Your Customer Contact Details

 

Over a period of time, customers change their contact persons, phone numbers (including landline), email-ids and even physical locations. Having an updated customer contact database facilitates the collections process and this could be critical in following up on delayed payments and/or taking legal recourse.

Tip #5: Train Your Team to Follow up with rigor and discipline

 

A well trained tele-calling follow-up team knows when to use appropriate tricks of the trade – like calling on odd-hours, when to insist on cheque number, follow-up based on customer’s cash flow cycle, and so on.

Watch this space for more on each (and many more) of the above.