getting paid Archives

Gross Profit Officer – appoint one today!

Ask yourself how much your bottom line will improve or decline by if you raise or lower your gross profit margin by just 1%.

The concept of a Gross Profit Officer came out of a brainstorming session with a client of ours in which we looked at how they could make more profit from any given level of sales.

It made sense to us, it will probably work for you, so what is the role of the Gross Profit Officer (GPO)?

Gross profit is the difference between the selling price and the costs of making the sale. It’s often expressed as a gross profit margin i.e. if you sell for £100 and the costs of making the sale are £45 then the gross profit is £55 and the gross profit margin is 55/100 = 55%.

Raising the gross profit margin means that for every sale you make there is a higher profit and most of the higher profit will drop straight down to the bottom line.

You also make more money so cashflow is improved.

The other side of the coin is that a smaller gross profit means every sale is less valuable, the bottom line is eroded and cashflow suffers.

So it’s important to ensure your business makes the gross profit margin you want it to.

Hence the role of the GPO.

What does the Gross Profit Officer do?

In the business we were looking at they do thousands of individual jobs for clients each year. An account manager will run the job – agree the scope, agree the price, organise the suppliers to do the job, agree costs with suppliers, make sure the job is done correctly and then make sure it is invoiced.

Gross profit is affected in several ways:

the selling price
the costs of the people doing the job
the quality of the job – you want the customer to come back for more
getting paid in good time by the client

So the role of the GPO is to review these aspects of a sample of jobs or contracts with each account manager to make sure the expected gross profit margin is being made or exceeded and to learn lessons in cases where gross profit was below target.

The GPO will be a coach, enhancing the skills and confidence of the account managers so that they have more positive conversations with customers and suppliers, sharing their experience and the best practice of the organisation.

In addition, they will set a minimum standard of performance for their team and make sure that the basics of how gross profit is generated are kept front of mind everyday.

And there’s more – the GPO will look forward. They will look at several jobs that are in the pipeline which have not yet been priced and make sure that these jobs will make the desired level of profit.

We can’t afford a GPO

Ask yourself how much your bottom line will improve or decline by if you raise or lower your gross profit margin by just 1%.

Still can’t afford a GPO?

As it happens, in the client we were looking at, the GPO role was not a full-time job. It’s something they can add in to the job description of an existing member of staff.

So don’t wait – appoint a Gross Profit Officer today!!

Michael

Related links:

Profitability and cashflow

Proof of Profit

We could get a lot bigger if only we sell what we sell!

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Chartered Accountants – Bedford House, Fulham Green, London, SW6 3JW

Customer timeline report – a window into the soul of your customers

The customer timeline report – it’s a window into the soul of your customers’ behaviour!

Customer timeline report

A window into the soul of your customers

Based on the Customer Balance Detail report in QuickBooks, the timeline report is a brilliant tool for you to manage your debtors and speed up collection.

You can use it to:

Speed up credit control on larger, more complicated clients and projects
Identify patterns in your invoicing and the client’s payments over time
Identify where payments have been allocated against the wrong invoices or credits
Create a spreadsheet you can share with colleagues and clients to clarify how much is owed and get debtor balances paid
Clear up old, unmatched positive and negative debtor balances

Here’s how you build your own version of report for your business:

Downloading the report and customising it so it tells the story of how a debtor balance has built up is a great way to share information with your clients to help resolve long-standing payment disputes.

Start using the customer timeline report to speed up debt collection in your business today!

Michael
@bluedotmichael

PS – we do lots of bespoke QuickBooks training for business, can we help you?

Getting paid on time – your company is NOT a source of alternative finance!

Remember – your company is NOT a source of alternative finance for your customers!

Getting paid on time – it’s one of the biggest drags on the business community and it hits the smaller business particularly hard.

But there are things you can do, it’s time to hit back.

Remember – your company is NOT a source of alternative finance for your customers!

Contracts and agreements

Firstly, have a standard contract for the work your company does which includes the prices you charge and the terms of payment. Get it signed by both parties.

Sometimes it’s difficult to know the exact price in advance, particularly for some services, but give an estimate, allow for a contingency and make sure there are no surprises.

And if you think you will have to do a lot of work upfront then ask for an upfront payment on account before you start or before you release a phase of the work you are doing.

Sales invoices – right first time, on time

Sales invoices are the key to getting paid on time.

They should be correct, sent on time, contain the terms of payment and contain your full bank account details.

Sending sales invoices by email is sensible because it’s difficult for the recipient to say the invoice has not been received. And it’s a good idea to send the invoice to your main contact and to the accounts department of your client.

Direct debit

There are several direct debit services that you could use to get paid on time, such as GoCardless.

Direct debit is the closest thing to a silver bullet for credit control because you get paid on time, every time.

And if a client or prospect is unwilling to sign up for DD then you have a very good indiction that they might no be a client you want to have.

Chase for payment

Don’t be shy about chasing for payment. Your accounting software should be able to email statements and reminders to everyone who owes you money (if it doesn’t then you have the wrong software!).

Where debtors don’t respond – get on the phone.

If that doesn’t get you paid then stop working with the customer and consider legal action.

Don’t waste time with slow payers. They are painful to work with and a risk to your bottom line and remember – a sale is a gift until it’s paid for!

Michael

Five tips to improve your sales invoicing

If you are being paid on credit terms then sending the URL instead of the invoice is simply creating a reason for your invoice not to be paid.

Sales invoicing is vital whatever you are selling: you have to get your invoices out to customers in good time or face ongoing cashflow difficulties that could make you go bust. Continue reading “Five tips to improve your sales invoicing”

Credit control

A sale is a gift until it’s paid for.

If you give credit terms to your customers then make sure they pay you on time.

You’re not a bank so don’t let your customers borrow from you, which is what they’re doing if they delay payment.

We help companies stay on top of credit control from start to finish:

credit checking prospects and ongoing customers
invoicing accurately, electronically, punctually
chasing for payment – phone is best!
taking action against slow payers

Put credit control front and centre in your business – you can’t afford not to! Continue reading “Credit control”

Credit management – A sale is a gift until it’s paid for (part 2)

Every business should be compelled to sell to a large, multinational organisation every now and then just to be reminded of the pain you have to go through sometimes to get paid.

If your business model doesn’t allow you to be paid upfront…….…..read on Continue reading “Credit management – A sale is a gift until it’s paid for (part 2)”

Tag: getting paid