When closing the deal the business manager arranged financing through the bank and explained the conditions to us.  The most important issue to my daughter was the amount that she needed to pay.  When she ran into problems with the bank after a month, she approached the dealership that had provided us with the details surrounding the car loan and asked why the conditions (according to the bank) were different from those that had been explained by the business manager.

After discussion with the business manager, it was clear that an honest mistake had been made.  However, the business manager told my daughter that she needed to solve the problem by getting another loan, on her own, and pay off the original loan.  In other words: despite the error that the business manager had made, she was not prepared to take on the responsibility, and accountability for the error, and resolve the issue on my daughter’s behalf.

This attitude did not sit well with me and I approached the general manager of the dealership, explained that this was the third car our family had bought from them in the last three years and that I was sure he felt that the dealership needed to take a more proactive role in resolving this issue.  Not surprisingly, he agreed, and they are now buying out the loan themselves and putting my daughter into a loan at a bank that can accommodate her needs.

Has this left a bad taste in our mouths?  Absolutely.  However, the general manager may just have saved the day, as long as the new deal goes through without a hitch.

By not taking responsibility for the error she made, the business manager put at risk, on the dealership’s behalf, a 10-year relationship (leasing and then buy-outs) with a family that has been totally loyal to them.  A family that has referred numerous other people to them.  And all because she just couldn’t be bothered to solve a problem that was of her own making.  It was much easier to push the problem onto a young and inexperienced person (as far as car loans goes) than to realize this was a much bigger issue than just concluding a deal and patting herself on the back.

Most often customers expect good service.  That is not what keeps them loyal.  It’s that one experience of bad service that tears a relationship apart, and drives customers away (also read Why do customers leave you).  A few year’s ago I read a wonderful book titled: “Delight Me…The Ten Commandments of Customer Service”.  The most most dramatic and incredible fact that was presented in that book was:
• 60% of “satisfied” customers regularly switch companies or brands.
These days it’s less about keeping customers satisfied – everyone tries to do that.  These day’s it’s all about Customer Delight – going above and beyond.

So, how are YOU making sure that your customer stays happy and loyal, and that your staff are not creating problems for your business relationships?  Make sure that there is a process for customer feedback in place and ensure that your employees are well trained.  It only takes one small problem with a bad attitude and your customer could be gone forever.  And remember, if your business is built on repeat sales, then that bad attitude could cost you the lifetime value (multiple purchases over many years) of that customer – not just the deal that has a problem attached to it.

Neville Pokroy from the marketing company Mastermind Solutions consults in the areas of strategic marketing planning, as well as in the development and execution of marketing strategies and plans. He assists companies who require marketing expertise to plan and fully execute marketing programs.   He helps them make good choices, particularly with regard to the emerging technologies.  If you want to have more choice in marketing your business, set yourself apart, and increase the odds of generating additional revenue for your business, visit our website or call (905)886-2235.  Please follow me on Twitter: @smaaketer

As the owner of your business, do you have a person heading up the accounting function who has limited experience managing an accounting and finance function?  Very few SMEs will have an accountant with a designation and strategic skills in that role, which for convenience I will refer to as the Controller (other common titles are Accountant, Office Manager, Accounting Manager, etc.)

As a result, there often is a Controller with good basic accounting skills but limited experience and formal training, reporting to a President who does not know what guidance or direction to give her. In Part 1 of this article we will lay out six simple steps to enhancing the contribution of your Controller.  Next month, in Part 2, we will help you coach your Controller to find the time to implement these improvements.

The situation is often compounded by the Controller being overloaded with work (who isn’t?) and frustrated.  Would your Controller like to be able to do more than balance the books and produce the financial statements that the current accounting package is set up to produce.  In the extreme, management doesn’t even read the monthly financial statements, beyond perhaps looking at the “bottom line.”

This type of scenario is a prescription for a Controller who is considered an overhead and not a “contributor,” who is frustrated and demoralized by their job.  With no one to guide them they often stagnate and continue to do more of the same.

Here are some steps that the President of a business can take to upgrade the value of the Controller, which may seem like extra work but often can help to make the function more efficient (more about this in Part 2, next month) and enhance the satisfaction they get by becoming a valued member of management:

1.    Set a standard for the preparation of your monthly financial statements in number of days after the month end. Ensure that your financial staff are committed to publishing them on time every month e.g. 10th of the month.  This will assist them to keep this as a priority, so that you get the information on a timely basis.

2.    Arrange a meeting with all your senior management, including the Controller, every month, to be held shortly after the financial statements are available.  The Controller should review the results and highlight unusual or unexpected results.  Management should discuss each such item to determine what steps to take.  Consider both good news and bad news. Good news is an opportunity to determine what can be done to repeat the events that gave rise to it and bad news is an opportunity to mitigate the risk of the circumstances recurring.

3.    Having this meeting on a regular and timely basis facilitates management using the financial statements as a springboard to highlight opportunities for action that will enhance the business operations and its profitability.  Ensure that management asks the Controller to explain what has caused major variances from budget and/or preceding comparative periods.

4.    Management and the Controller must prepare a budget annually.  Ensure that it includes an earnings statement budget, balance sheet and cash flow forecast.  Bankers and other outsiders who read budgets are always much more impressed when a budget includes a forecast of the balance sheet at the end of each month and a cash flow statement.  You would also need them for internal purposes so that you are not caught in a sudden crisis, by not anticipating the cash flow consequences of your operating expectations.

5.    If a banker looks at the ratios in a set of financial statements to determine the health of a business, shouldn’t you, the owner, look at the same information? The Controller should prepare a monthly statement of ratios and key performance indicators on a comparative basis.  He should be able to explain, in simple words, why a ratio has changed, so management can consider the trend in each of them and what to do to manage the situation, for better or worse. Some ratios that apply to most businesses are:

• Current ratio
• Quick ratio
• Gross margin percentage, by sales category
• Expenses, in major categories, as a percentage of sales
• Debt to equity ratio
• Days receivables outstanding
• Days inventory on hand

For example, the days receivables outstanding and days inventory on hand are often very good warnings about cash flow problems and often are the first sign that more analysis and focus is required to ascertain exactly where the problem lies, so that management can develop a plan to solve the problem.

6.    In order to stay on top of the business on a timely basis, your Controller should prepare a snapshot of month-to-date information for the Key Performance Indicators (KPI) that are available for your business.  This should not take more than an hour, at most, to prepare, once the format is set.  I find that the most appropriate frequency is to prepare this every Monday for the week just completed, plus on the first day after a month-end so that you have a clear indication of the status of the key areas of the business.  Each business will select different indicators to include in the snapshot.  Some ideas to get you started:

• Sales
• Cost of Sales
• Gross margin %
• Bank balance/Line of credit usage
• Outstanding cheques
• Accounts receivable – aging breakdown
• Days sales outstanding
• Accounts payable – aging breakdown
• Inventory – by major category
• Orders received – # and $ value
• Operating statistics
• Labour statistics

Of course, there are many more depending on the nature of your business and the nature of your tracking systems.

In Part 2 of this article we will address where the Controller can find the time to implement these improvements.

James Phillipson is a Chartered Accountant and a Principal of Mastermind Solutions Inc. with extensive experience in large and small businesses.  He has provided financial counselling to his clients since 1996, often in the role of or as a coach to a Controller or Chief Financial Officer.  James has experience in financial roles in a wide variety of businesses and industries.

Each survey was done independently from the other and yet, amazingly, all came with nearly identical responses.

• 14 percent left because of complaints not taken care of.
• 9 percent left for the competition.
• 9 percent moved out of town.
• 68 percent said they left for “no special reason.”

In other words, seven out of ten people who were “steady” customers said they left for “no special reason.”

I don’t believe that. I think there was a reason. I think the reason was the business did not keep in touch with their customers. They took them for granted. And when someone is taken for granted they don’t feel important and are susceptible to the next mating cry. Having the customer repeat buying from you means doing more business with you. Good selling depends heavily on repeat business.

Here’s why: It is far, far easier to sell more to the customer you have than to sell a new customer. And yet the average business spends five times as much time and money searching for a new customer than they do on the customer they already have. If they keep following that path they will soon discover the customer they thought was locked up, committed and loyal has…disappeared.

The national average of customers who leave you every year is about twenty percent. That’s one out of five of your current customers! If that trend continues for a few years you will be out of business if you don’t go in one of two directions: (1) Find a way to have 20 percent new customers or (much better) (2) Recapture some of the ones that left.

A study by Bain & Company in Boston said if you can cut that 20 percent defection in half you can double your bottom line profit!

• Because of the money you spent to secure them the first time.
• Because they will spend more as the years go by.
• Because their income increases.
• Because their family (or business) grows larger.
• Because they tell others to buy from you.
• The longer you keep a customer the more money you make. An auto service company said their expected profit from a customer that stayed with them for four years was more than triple the profit the same customer generated their first year.

John Romero, the premier direct marketer in the casino industry tells of the time a senior executive came to his office and said, “We need new business.” John’s answer: “What’s wrong with old business?” His point: businesses overlook the once productive customers they once had still hidden away in the company’s database. His question: “Why would you spend years developing a customer then ignore him because he stops coming? There’s pure gold in that file of names waiting for you to dig it out. It¹s the best new business you can find.”

How do you know when a customer is about to leave? New computer programs can track your customer’s behavior past and present. When their pattern begins to vary greatly with fewer sales, smaller sales, less contacts, you should start hearing warning bells ringing. Their pattern is changing. Time to contact them and ask if everything’s all right.

Here’s why this is important: Accounting systems don’t list the value of a loyal customer. Most businesses don’t recognize, know about or pay attention to this phrase: “The lifetime value of a customer.”

I remember talking to Stew Leonard at his famous supermarket in Norwalk, Connecticut who explained it simply: “The lifetime value of a customer in a supermarket is about $246,000. Every time a customer comes through our front door I see, stamped on their forehead in big red letters: $246,000! I’m never going to make that person unhappy with me. Or lose her to the competition.”

Some businesses ingratiate themselves to their customers to the point where they almost become a part of the owner’s family. Customers are greeted warmly as old friends when they arrive and your conversation picks up from the last time they were with you. There’s an old speaker’s phrase: “No one cares how much you know unless they know how much you care.”

Some businesses succeed because they simply persevere, like the salesman who called on me to sell me ties. His products were made of synthetic fabrics. All our ties were natural fabrics: silk, cotton, wool. One year when he appeared, I said, “Phil, we don’t carry ties made out of polyester or synthetics. When are you going to stop calling on me?” He looked at me and softly said, “Depends which one of us dies first…”

For those who say, “Well, it worked for others but it won’t work for me. I tried and gave up.” But why give up? Persevere!

Remember the words of Winston Churchill in his 1941 address at the Harrow School: Here’s almost his entire speech: “Never give in. Never. Never. Never. Never. Never. Never.”

Article by Murray Raphel

Murray Raphel is one of the world’s leading speakers and consultants on direct marketing, advertising and promotion with an emphasis on taking care of the customer.

Murray speaks to business groups, associations and international corporations on how-to-do-more-business. www.raphel.com

Marketing Tip of the Month

Really understanding your customers or clients, and their needs, is crucial to keeping them. It’s not only their business that needs to be understood, but also a whole range of non-tangibles, including:

• How do they make decisions?
• How quickly do they make decisions?
• How can their perceptions be recognized and (perhaps) influenced?
• Who are the influencers of the decision?
• What is their typical lag time for making a decision?
• What are the factors that they consider when making a decision?
• Can you influence their needs to create a demand for other products or services?
• What needs to be done to positively mould their attitudes towards you?

Building the foundation upon which a decision is made is as much a part of selling, as the selling process itself. That foundation building process is called marketing. It is a crucial part of the overall selling process that develops the environment that makes selling easier, or in many instances, possible.

Make sure that your marketing and selling efforts are in alignment. If they aren’t, the process of selling could be as tough for you as it is for a fish to swim upstream. Just ask the fish: doesn’t he find it easier to swim WITH the current?

Read also: Customer service is more about what you don’t do

Neville Pokroy from the marketing company Mastermind Solutions consults in the areas of strategic marketing planning, as well as in the development and execution of marketing strategies and plans. He assists companies who require marketing expertise to plan and fully execute marketing programs.   He helps them make good choices, particularly with regard to the emerging technologies.  If you want to have more choice in marketing your business, set yourself apart, and increase the odds of generating additional revenue for your business, visit our website or call (905)886-2235.  Please follow me on Twitter: @smaaketer

An old man lived alone in Idaho. He wanted to spade his potato garden, but it was very hard work. His only son, Bubba, who used to help him, was in prison.

The old man wrote a letter to his son and described his predicament.

Dear Bubba:
I am feeling pretty bad because it looks like I won’t be able to plant my potato garden this year. I’m just getting too old to be digging up a garden plot. If you were here, all my troubles would be over. I know you would dig the plot for me.
Love, Dad

A few days later, he received a letter from his son.

Dear Dad:
For heaven’s sake, Dad, don’t dig up that garden. That’s where I buried the BODIES.
Love, Bubba

At 4 a.m. the next morning, FBI agents and local Police showed up. They dug up the entire garden area without finding any bodies. They apologized to the old man and left. That same day, the old man received another letter from his son.

Dear Dad:
Go ahead and plant the potatoes now. It’s the best I could do under the circumstances.

Love, Bubba

Creativity is an intriguing thing.  It comes in so many forms that are too numerous to mention.  Realistically, new forms are still being invented every day – and the beauty of creativity, is that this trend will continue while there is life in us all.

We can achieve many things if we look for the creative side of dealing with problems and challenges.  And the best way to begin is to see all problems and challenges as opportunities.  This will open our minds and ensure that our creative juices flow.

Use the opportunity now to take stock and to re-invigorate your creative juices.  How about some reading?  Or visit an art gallery?   Attend a seminar.   Or do something that you haven’t done in 10 years – it may just take you back in time to a different mindset.  Anywhere that the creative juices can be sparked.  What do you have to lose?  Why not give it a go?

So, how do we apply this to marketing?   Here are some suggestions.  Let these ideas become the first spark of your creative juices.  Hopefully, before long, you will have tons of new ideas to drive your business.

• Don’t always take the easy way out and follow the crowd. Try something counter-intuitive.  No, don’t just think about doing it – actually TRY IT.
• Always look to current trends in the market and adapt them to meet your needs.  Try to create a twist on a current idea.
• Steal your competitors ideas and make them better (don’t keep them the same – this will probably do more damage than good). Do you really know what they are up to anyway? If not, maybe it’s time to find out.
• Always try to become the leader. Leaders are always more successful.  Leaders make things happen.
• Use the people around you to supply you with new ideas. Offer your staff an incentive (dinner for two?) for the best new idea. Or create an internal (friendly) contest that livens up the competitive spirit in this challenging time.
• Carry a small notebook and a pen around with you. That way, if you are struck by an idea, you can quickly note it down.
• If you’re stuck for an idea, open a dictionary, randomly select a word and then try to formulate ideas incorporating this word. You’d be surprised how well this works.
• Exercise your brain by reading a lot, talking to clever people and disagreeing with them – arguing can be a terrific way to give your brain cells a workout.
• Take risks. Learn from failure. It’s not always bad news ultimately.
• Face the challenge from another person’s perspective. This will allow you to “look at it through different eyes”

Do you need help in developing new ideas and strategies?   I’d love to help you.  Feel free to  contact me and we can challenge each other.

Comments, suggestions or thoughts – please follow me on Twitter: @smaaketer

Neville Pokroy from the marketing company Mastermind Solutions consults in the areas of strategic marketing planning, as well as in the development and execution of marketing strategies and plans. He assists companies who require marketing expertise to plan and fully execute marketing programs.   He helps them make good choices, particularly with regard to the emerging technologies.  If you want to have more choice in marketing your business, set yourself apart, and increase the odds of generating additional revenue for your business, visit our website or call (905)886-2235.

“If you’re not willing to embrace change you’re not ready to lead. Put simply, leadership is not a static endeavor. In fact, leadership demands fluidity, which requires the willingness to recognize the need for change, and finally, the ability to lead change”.

The article adds: “While there is little debate that the successful implementation of change can create an extreme competitive advantage, it is not well understood that the lack of doing so can send a company (or an individual’s career) into a death spiral. Companies that pursue and embrace change are healthy, growing, and dynamic organizations, while companies that fear change are stagnant entities on their way to a slow and painful death”.

In my role as a change agent by helping companies that are dissatisfied with their marketing and sales efforts to embrace a more organized and definitive approach to marketing strategy, planning and implementation, I am often faced with clients that find change hard to accept, embrace and implement.  I fully understand their perspective and I work extremely hard to facilitate a process of change that, at first blush, appears daunting, but faced with the alternative that the writer of the Forbes article has clearly identified: “companies that fear change are stagnant entities on their way to a slow and painful death”, most leadership teams buy in, slowly at first, and then with greater commitment as the process proves to be less painful than originally contemplated, and then starts showing success through results.

However, the hardest point in the process is taking that first true step, not a false start, but a true step to making change.  The leadership team must realize that if they continue to do things as they have done in the past, they just cannot expect a different outcome.  If they are indeed unhappy with their current efforts and outcomes, then change becomes the only way to survive.  Therefore they need to buy into the process of change – whether they like it or not.

So, read the full article (thanks to Forbes Magazine and the author Mike Myatt) and buy into the fact that change is a necessary evil in a changing environment.  It may provide you with a starter kit of getting a change mentality built in your organization.

Comments, suggestions or thoughts – please follow me on Twitter: @smaaketer

Neville Pokroy from the marketing company Mastermind Solutions consults in the areas of strategic marketing planning, as well as in the development and execution of marketing strategies and plans. He assists companies who require marketing expertise to plan and fully execute marketing programs.   He helps them make good choices, particularly with regard to the emerging technologies.  If you want to have more choice in marketing your business, set yourself apart, and increase the odds of generating additional revenue for your business, visit our website or call (905)886-2235.

As with many cash flow objectives, there is an art in finding a delicate balance. Inventory management is definitely both an art and a skill that requires the practitioner to sometimes walk a tightrope between minimizing inventory and risking running short. Consider the strategic consequences for a variety of business scenarios:

• A clothing retailer, at the end of a season does not have a particular shirt in stock for a customer;
• An exclusive wholesaler of imported machinery parts does not have the part required to repair a piece of equipment in a customer’s production line;
• A manufacturer does not have the raw materials required for a critical component which has a long lead time for delivery.

From these examples it is obvious that the consequences of not having sufficient inventory can run from pennies to millions and that the ramifications can extend from losing one sale to shutting down a plant for a period of time, or causing the shut-down of a customer’s plant e.g. a supplier of components to a large auto manufacturer.

Similarly, one has to assess the benefits and risks to one’s relationship and reputation if your customer is dependent on your having inventory, especially for long-term contracts and where alternative suppliers are available to your customer.  We are all aware of the maxim that the cost of acquiring a new customer far exceeds the cost to maintain a current one. Thus, in assessing the strategic consequences for your business, one must often also assess the strategic consequences for your customer.

As a result, it is critical that you assess your risk and determine how critical that risk is for your business. This will determine how much you are willing to invest in ensuring that you do not have a shortage of inventory. The answer is usually complicated and will apply differently to different products and markets. As this level of complexity increases in a business, it becomes important to assess what processes and areas to invest in, to ensure that inventory shortfalls are minimized.

The most common metric used to measure the effectiveness of inventory management is inventory turns. This is usually calculated as the average cost of inventory on hand divided by the cost of goods sold in the period, stated as the number of turns per annum.  There are many variations on this. Acceptable number of turns vary significantly depending on the type of business and the approach taken to inventory management. Manufacturing companies often are in the 6 to 8 turns and low margin retailers can reach in excess of 12 turns per annum.

This metric should be monitored over various periods and significant changes should be investigated to determine the cause. This can be done by determining the inventory turns by inventory type.

The cost of carrying inventory can be very significant and is rarely measured. It is difficult to measure and also to know what costs should be attributed to the cost of carrying inventory. These include:

• Cost price of the inventory on hand, including logistics to get it to the warehouse,
• The costs of warehousing it (e.g. rent, utilities, insurance, taxes, etc.),
• Cost of money,
• Physical handling costs (labour and equipment),
• Clerical and inventory control costs,
• Obsolescence, deterioration costs, shrinkage, and
• The cost of logistics of moving it to the point it is used in manufacturing.

In very efficient warehouses these costs usually exceed 15% of the cost of the materials and most estimates are in the 25% to 35% range.

The delicate balance is best exemplified by the manufacturing industry’s implementation of the “just-in-time” (JIT) approach. This illustrated the importance of minimizing inventory in an effort to have the correct inventory necessary at the right place at the right time. It grew in prevalence as manufacturers recognized the costs of holding and managing inventory.

In recent years there has been more awareness of the consequences of using JIT. This is especially true where there are long supply lines and those that cross borders, or start in volatile parts of the globe (due to political disturbances, natural disasters, transportation issues, etc.).  As a result the objective in recent years is to find a balance that meets the strategic needs of the business and all its supply considerations.

Some companies have used JIT systems combined with material planning systems to negotiate inventory replenishment arrangements with suppliers. These suppliers provide production supplies or raw materials on short notice, reducing carrying costs. Some suppliers will provide product based on usage so that title passes during production rather than on receipt. These types of arrangements transfer the financial carrying costs but not the warehousing costs to the supplier.

Let’s review some more common approaches to investing in reducing inventory levels:
For many small businesses the first step is to ensure that staff are aware of the importance and costs of not holding an absolute minimum of inventory. Where production or operations staff are responsible for ordering, their emphasis is often a sense of security – that they never run out of stock and therefore they build in unnecessary stockpiles. This is an area where it is very easy and common for the employee’s personal motivation (possibly due to fear) to exceed the needs of the business.

The second step is to measure the inventory and report on it.  One cannot manage what one does not measure.  The complexity and comprehensiveness of this depends on some of the steps below. However, it is critical that inventory measurement is implemented and reported with appropriate key performance indicators (KPIs) to alert executive management that appropriate questions are necessary. Examples of relevant KPIs are inventory turns, out-of-stock, wait time metrics, shrinkage rates, order lead times, etc. Be aware that most ERPs will easily produce these KPIs at the detail level of each SKU, which is great for the staff managing inventory at that level. However for management, summarized KPIs by geographic area or product line, can be more meaningful as they do not have the ability to spot trends in the details.

Most good accounting packages (even the basic ones provide some features for inventory management and reporting) and ERP systems have a range of features that enable management to track inventory on hand, usage-over-time and forecasts. For many businesses the big challenges are implementing the features that are relevant to their needs and maintaining the discipline to ensure that all the necessary data is maintained as a priority.  Part of the success of a good system is the ability to integrate different systems in a seamless way, so that all the relevant data can be utilized effectively. Too often we see systems that are incompletely implemented or not properly maintained, which results in inaccurate data. It takes time and a lot of effort to implement and maintain reliable data. When this doesn’t happen, the cost of recovery usually exceeds considerably the cost that would have been required to maintain it.  Of course, the worst scenario is where the system loses credibility and the staff does not rely on it.

This emphasizes the importance of having adequate staffing to manage the inventory, i.e. the number of people with the requisite skills. Where they are not dedicated to inventory management, they also need the management support for ensuing that this critical role is maintained.  Also, it is very important that the processes and systems are not regarded as static and that the staff strives for continuous improvement. It is also really important that the staff have a reporting relationship to a supportive senior manager who sees the importance and benefits of inventory management.

In too many businesses the management fails to clear out slow moving inventory on the basis that it will be useful or sold one day.  This philosophy is dangerous as it detracts from all the concepts of minimizing inventory and creates a cost of holding it that is financial, inefficient and potentially demotivating to the staff (who see selected items sitting idle while being pressured to minimize inventory in other areas).

There are times where minimizing inventory levels may not be the best strategy for the business, as long as the business has the working capital resources to afford it, such as:

• Strategic considerations regarding supply lines, as discussed above;
• There is an expected price increase for either the product or the costs of acquiring it (e.g. shipping costs);
• There is a low cost and strategic advantage to assuring, maybe even guaranteeing, your customer that you will have the inventory when they need it;
• Efficiency can be enhanced by having longer production runs;
• Cost of shipping/delivery can be reduced by doing so in larger volumes; etc.

Minimizing inventory results in an increase in the cash flow and the focus on some of the practices above will reduce the inventory and therefore the cash that is tied up in it. The art or trick is to find the right balance for your business.

If you found this article valuable, you may want to refer to previous articles in this series:

• Cash management
• Credit granting policies to improve cash flow
• Collection practices to maximize your cash flow

In the next article in this series on Cash Management, we will discuss accounts payable policies and practices to improve cash flow.

David Balmer is a Chartered Accountant with over twenty years of Treasury experience with companies such as RJR Nabisco, Cott Corporation and Maple Leaf Foods Inc. He has presented at treasury conferences in Canada and the United States. He has also earned treasury designations from treasury organizations in both the United States and United Kingdom. Contact David at dbalmer@sympatico.ca .

James Phillipson is a Chartered Accountant and a Principal of Mastermind Solutions Inc. www.mastermindsolutions.ca , with over twenty years experience in large and small businesses.  He has provided financial counseling to his clients since 1996, often in the role of or as a coach to a Controller or Chief Financial Officer.  James has experience in financial roles in a wide variety of businesses and industries. Contact James: james@mastermindsolutions.ca

The real question owners and marketers for these companies need to ask is NOT: “should I implement these technologies”?  Rather, it IS: “how can these technologies help me and why should I use them”?  Once they have answered that critical question, then, and only then should they be asking the question: “how should I implement them”?

These days, people are jumping to the HOW question too quickly before understanding the real value of the technologies to their specific circumstances, and asking the WHY question first.  What many people truly miscalculate is the cost to implement these technologies – not just the hard costs in $, but in soft costs like time, energy, focus and effort that is sucked up from their own people.

QR codes, marketing automation, social media, videos, podcasts – yes, more and more of these tools are becoming mainstream, however they are not universally applicable to all businesses, industries and circumstances.  Don’t get caught up in the hype that “you have to get in to it”, just because everyone else is.  I have come across too many people in the last year that complain to me that marketing does not work because they implemented a technology driven campaign that was not well thought through and had very little rationale with regard to their customers and prospective customers.  Sorry folks, it’s not the fault of marketing.  Look in the mirror and ask yourself whether you truly examined the question: “why should I do this”?

Technology is a great tool when used properly.  It’s no different to a non-technology tool.  If you use a circular saw in the right circumstances, for the right reasons, and you know how to use it, then your outcome will likely be positive.  If you use the same tool under the wrong circumstances, and you don’t know how to use it properly – beware the outcome (and your fingers!).

And no, you’re not to feel bad if you decide against using the new technology because it doesn’t work for you.  No one will see you as a dinosaur – except maybe the salesperson you just sent packing.  And really, that doesn’t matter, particularly if he is not your target customer.

Comments, suggestions or thoughts – please follow me on Twitter: @smaaketer

Neville Pokroy from the marketing company Mastermind Solutions consults in the areas of strategic marketing planning, as well as in the development and execution of marketing strategies and plans. He assists companies who require marketing expertise to plan and fully execute marketing programs.   He helps them make good choices, particularly with regard to the emerging technologies.  If you want to have more choice in marketing your business and in setting yourself apart, and increase the odds of generating additional revenue for your business, visit our website or call (905)886-2235.

But how many people understand strategic marketing?  A concept that has a higher level interpretation that focuses on things like target market, positioning, differentiation, the psychology of decision making and purchase behaviour, branding etc, that links the communications side of marketing to business strategy.

Most companies do not realize the short and long term importance of have a clearly defined and executed link between business strategy and the communications side of marketing.

The missing link between business strategy and marketing is Strategic Marketing

This LINK, if it is not well defined and developed may very well lead to marketing communications decisions being made that are not consistent with the overall strategy of the business.  It could easily set the company moving down a path that creates more problems than benefits.

Strategic marketing also takes a longer term view of marketing and is responsible for laying the ground work for better decision making at the tactical level – inside the marketing department at all levels.  If the strategic marketing direction is clearly defined – you can have much greater confidence in the decisions that end up spending 000′s of your valuable dollars.

Not every marketer has a good sense of strategic marketing – most marketers operate at a tactical level in the trenches.  However, if you have ever asked: “how do I know if my valuable marketing dollars are being well spent?”, you should be speaking to a strategic marketer who can help you with the answer.

If you have ever done strategic planning in your organization and have not followed that up with a strategic marketing plan, you may be missing the LINK.  And this may be causing your marketing to operate at a less than optimum level.  Fill in the gap and plug that missing link.  It’s too important if you are spending any real money on marketing (and yes, you ALL are…)

Neville Pokroy from the marketing company Mastermind Solutions consults in the areas of strategic marketing planning, as well as in the development and execution of marketing strategies and plans. He assists companies who require marketing expertise to plan and fully execute marketing programs. If you want to have more choice in marketing your business and in setting yourself apart, and increase the odds of improving company performance, visit our website.

So how can you make sure you don’t fall into the same trap and use Powerpoint as a powerful partner in your important presentation?  Here’s 10 tips to help you get your presentation and the tool (Powerpoint) in the right balance:

1. Build a story that’s relevant and engaging to your audience.  Try to have characters and a beginning, middle and end.  Powerpoint can help with visuals that create an emotive connection with your story.  Set up the call to action and make sure the end of the story focuses on that desired call to action or outcome.
2. Your verbal presentation should provide the details while the Powerpoint focuses on the highlights and visual impact to create memorability.  Don’t have more than 4 or 5 bullets (maximum) on each Powerpoint slide.
3. Be direct and concise – when last did you hear someone complain that the presentation was too short?
4. Use facts and real-life examples that are real and relevant to your specific audience.  If your audiences change, so should you examples.
5. Keep your Powerpoint slides simple and easy to read.  Less text, in bold simple fonts is preferred and more visual appeal is desireable.  However, don’t make your backgrounds too busy – it will hurt the readability.
6. Never read what is on the slides – the audience can do that themselves.
7. Face the audience when you present.  You should have the computer screen between you and the audience so that you know at all times what is on the main screen behind you.  By doing that you can always refer to something on the screen without turning around.
8. Use a laser pointer if you have to refer to something on the screen.  And make sure you have a remote device to advance your slides.  Always moving over to the computer and clicking on a button to advance the slides takes the focus away from your message.
9. Keep to the time that you were given for your presentation.  Make sure you practice ahead of time to see how long your presentation normally takes.  And leave some time for questions and answers.
10. Don’t give your audience you Powerpoint slide deck ahead of your presentation – it will often prevent them from focusing on you, the presenter.  And ask yourself – do they really need a copy of the full slide deck anyway?  Maybe just a quick summary of the pertinent points will be a more effective and relevant handout at the end.

Neville Pokroy from the marketing company Mastermind Solutions consults in the area of strategic marketing planning, as well as in the development and execution of marketing strategies and plans. He assists companies who require marketing expertise to plan and fully execute marketing programs. If you want to have more choice in marketing your business and in setting yourself apart, and increase the odds of improving company performance, visit our website.

A sale is not complete until the receivable is converted to cash. Delays in receiving cash increase the amount of working capital that has to be financed by bank loans or delaying trade payments. Each method has costs such as increased interest expense, loss of cash discount or trade reputation. Unless these additional costs are charged for the profit on the sale will be reduced.

Customer deductions from the amount invoiced can take up a significant amount of a collector’s time and slow down the payment of remaining receivables. Other functional areas of the company can be impacted by the time and effort to resolve deductions. Most deductions are self-inflicted as they are caused by promotional discounts, advertising allowances or represent order processing-billing system problems. Resolving deductions promptly is key to collecting the remaining receivable.

Collection practices can be split into collecting the money, systematic follow up of accounts, customer discussion, and preserving goodwill.

Receivables do not improve with age. The goal is to collect the funds when due under the terms of the sale. The collection responsibility should be assigned to a specific person. This will depend on the account size, transaction volume, frequency and type of deductions among other factors. There should be a written procedure for escalating collection efforts and advising management as receivables age beyond the due date.

There should be a policy specifying how long after the due date the initial collection effort is made. The initial period of time could be as short as a week. The policy should also specify the timing of the second and subsequent follow up calls. The timing between calls, generally 10 to 15 days, will depend on giving the customer enough time to respond to the prior collection efforts, the number of follow ups and the number of people available to take part in the collection efforts. In some situations, such as complex deals and significant amounts, it can be appropriate to call before the due date and confirm that there are no obstacles to the customer paying on time.

Collection systems will probably be determined by the accounting system used to invoice customers and track accounts receivable. These systems can be used to prepare aged receivable reports, account statements, and collection letters. Account statements are widely used as the initial collection effort as they generally give good results and reduce the number of accounts that require additional collection efforts. They are not as effective when the accounts are significantly past due.

Customers who do not pay on time may have business problems. The collector should be prepared to be sympathetic and helpful. The aim of the collection call is to obtain a definite plan to pay the past due items. If they can’t pay the entire amount then a payment plan should be arranged to have a partial payment by a certain date and additional payments at future dates, until the entire overdue balance is paid. The details of the payment plan should be confirmed in writing to the customer.

During the collection process, it is important to be patient and maintain business courtesy. It is desirable to increase the tone of concern and urgency in each successive communication.

A customer who has not paid over a long period of time is one of the following types:

• They have the ability to pay but do not intend to;
• They are unable to pay all their debts and are only paying those who are pressuring them the most; or
• They are unable to pay and will likely be out of business soon.

These customers are in the final collection stage and the idea is to encourage the customer to pay its account and avoid the cost of collecting through third parties such as collection agencies and legal actions. Letters signed by a senior officer outlining the consequences of non-payment and the time remaining until action will be taken are most often used at this point in collection. The main objective may be payment of the account with customer goodwill being secondary. As a result it is often appropriate for the collections staff to involve management, so that delicate relationships are handled appropriately.

A number of companies provide automated collection software which interface with the receivables system and make collectors more productive. These systems create a single electronic interface between the collector and the information required for collections. The system automates the scheduling and logging of collection calls as well as schedules follow-up actions. These systems can also ensure that collection efforts are consistent among collectors and allow for performance comparisons between them. A common result of installing these systems is that collectors call customers earlier and maintain a consistent contact with them.

In the next article in this series on Cash Management, we will discuss how to manage your inventory to improve cash flow.

David Balmer is a Chartered Accountant with over twenty years of Treasury experience with companies such as RJR Nabisco, Cott Corporation and Maple Leaf Foods Inc. He has presented at treasury conferences in Canada and the United States. He has also earned treasury designations from treasury organizations in both the United States and United Kingdom. Contact David at dbalmer@sympatico.ca .

James Phillipson is a Chartered Accountant and a Principal of Mastermind Solutions Inc. www.MastermindSolutions.ca , with over twenty years experience in large and small businesses.  He has provided financial counselling to his clients since 1996, often in the role of or as a coach to a Controller or Chief Financial Officer.  James has experience in financial roles in a wide variety of businesses and industries.  Contact James at James@MastermindSolutions.ca .