Gambling with your Net Profit?

Remember the last time you got a paycheck from your employer? Wasn’t it great!? You were able to pay your bills and maybe even do a few extra-curricular activities with your family or friends.
In these days of direct deposit, seeing your bank account fill up at midnight of payday is a fantastic feeling for all of us. However, what would you do if your company decided to change your pay schedule by adding another week between paychecks?

If you are scared that this article will try to convince your employer of changing to a 3 week pay period, you are wrong. Fear not. What I want to get across to you is the very same sinking feeling that you have now about your money, your company feels the same about theirs. Do your employees (or you) really “get” what happens when customers do not pay your company on time?

Would you now agree that, getting paid is a seriously important part of business? Think about it, if your company does not get paid by it’s customers, then YOU, my friend, do not get paid. Not this week, not next week, not ever. You get to feel the harsh reality of unemployment or worse (if there is a worse).

If you never really thought about all this before, then there are some other crucial people and departments that haven’t either. Think about this: has your purchasing department talked about it with your sales department with your accounting department with your customer service agents and any other employees or departments? If you can safely say “I don’t think so” or “I don’t know” then you are saying “Probably not” (and we believe you).

Cash Flow

The issue isn’t really cash flow, but who “GETS” how cash flow works. As we discussed prior, you probably with great precision understand your personal cash flow needs. You also more than likely “get” what you need to do to make sure your debts are paid, bills are on time, and your credit is appropriately allocated. News Flash, your “departments” work together in harmony (most of the time) in your affairs of the wallet. When they don’t your lights go off, internet flickers, and the grocery cart is a little less full than usual.

The same thing is true for your company; however, you must now see that all the departments have to speak to each other. They each absolutely must understand their role in this flow of green goodness. I say that knowing that this seems like an overreaching and incredible task. You can’t just walk down the hall and poke your head into each office and say “Hey do you know this, well if not you need to…” and then go to the next office and so on.

Power

Knowledge is power, right? True enough, but your company needs to properly disseminate this knowledge in a way that creates permanent understandings between departments. This will allow each person to know that they impact net profit and how well or not the business runs just by punching keys on the keyboard in a certain order. That may be a simplistic view, but it is truth.

What if everyone understood and worked together when discounts are given on the front end and then extend the terms on the back end was a bad idea. Of course, more than likely your departments don’t always work that closely together to know when that sort of situation happens, or when the customer calls back and requests, and subsequently gets, free shipping (expedited of course).

Conclusion

In closing I have some questions for you about this whole scenario:

1)      How much money did your sales person make?

Sale Price – Discount – Extended Terms – Free Freight = ?

2)      How much money did the company put back on the bottom line?

Sale Price – Discount – Extended Terms – Free Freight – Sales Person Commission = ?

If you are scratching your head now to try to determine what is keeping your company in business, you need to contact me straight away.

BMIGC and Talent Reality 101 TM   has a proven method to make sure that EACH ONE of your employees truly understand this and wants to increase the bottom line for the company by vetting each customer request.

 

Contact us:

 

 

Bill Albert

 

President
Business Methodologies International, Ltd.
Winfield, IL 60190
630-393-3052

 

Bill.albert@businessmethodologies.com

 

 

 

 

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By: Daynah – DirectEffective.com & Bill Albert BMIGC

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