Tag: getting paid

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!

© Blue Dot Consulting Limited

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

She’s a bulldozer when it comes to credit control and getting paid

I’m sure there are awards ceremonies for credit control and getting paid but if they don’t present the Golden Bulldozer award then something is badly wrong in the world of credit management.

I’m sure there are awards ceremonies for credit control and getting paid but if they don’t present the Golden Bulldozer award then something is badly wrong in the world of credit management.

The changing face of credit control

Over the years, working practices and technology have changed but the basic need for good credit control has not.

Cash is king and businesses fail because they run out of money – so staying on top of credit control and getting paid is not optional, it’s fundamental.

From a tech perspective, most business have bookkeeping software which is far more accessible and powerful than it used to be.

Your bookkeeping software will contain some credit control tools such as:

  • reports of debtors and how old they are
  • a direct feed from your bank account so you can see money coming in each day
  • automated reminders being sent by email to late payers
  • statements of unpaid invoices that can be sent by email
  • there are also credit management apps that can be integrated into your software

Learn what tools are available to your business and use them.

Direct debit is your new best friend

Frequent readers of this blog will know that we mention GoCardless quite often.

GoCardless is a direct debit service that links in to your bookkeeping software and collects invoice payments from customers automatically by direct debit using whatever payment terms you and your customer agree.

The more customers you can sign up to a direct debit service the less of a headache credit control will be.

It’s also an early warning sign – if a new customer won’t sign up to direct debit then perhaps it’s because they are a bad payer you shouldn’t sell to them.

Get the basics right

Credit control is so much easier if you get the basics right. Such as:

  • have a contract or standard terms and conditions agreed in writing at the outset
  • send invoices, by email, punctually, to the correct contacts, making sure they are for the correct products or services, the agreed price and agreed payment terms
  • put your bank account details on your invoices, customer statements and any other credit control documents
  • send the PDF not a link – why make it more difficult for your customer to access your invoice?
  • if you invoice a customer the same amount each month then set up an automated invoice in your bookkeeping software

Get on the phone

This is where the bulldozer comment came in.

It was a huge compliment paid by the finance manager about her colleague who is responsible for credit control in their business.

There is no substitute for polite but tenacious phone calls to get customers to pay.

And support your credit control team by involving your sales and account management people in credit control. If you only pay commission when sales invoices have been paid then this tends to motivate sales people to help with credit control.

And if everything you’ve tried has failed then stop providing products and services to non-payers and consider legal action.

Credit control and getting paid

Credit control needs to be front and centre in many businesses.

There’s a cost to doing credit control but the costs of not doing it can be far greater.

Be organised, used the technology available and be tenacious. And above all:

Be more bulldozer!

Michael – @bluedotmichael

Related links:

Get paid quicker – 5 ways to avoid bad credit risks

Get paid quicker – 5 tips to improve your sales invoices

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

© Blue Dot Consulting Limited

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

Related links:

Profitability and cashflow

The VAT payment you were worrying about? That got paid last week!

Cashflow and upfront payments – do not think you are richer than you are!

Blue Dot Consulting provides accounting and business advisory services to clients across Central London, West London and South West London, with particular focus on Fulham, Hammersmith, Richmond, Putney, Wandsworth, Kensington and Chelsea. We help local business owners make better financial decisions and plan confidently for the future.

© Blue Dot Consulting Limited, Chartered Accountants, Bedford House, Fulham Green, London, SW6 3JW

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)”