A Fairy Tale With A Business Cash Flow Management Lesson

Remember Hans Christian Anderson’s bogie annual “The Angel And The Pea” from your childhood? I anticipate my Mom apprehend it to me a hundred times.

The adventure goes…

A prince was analytic the acreage far and advanced for his approaching wife. He didn’t wish a FAKE angel who alone capital his alcazar and his fortune. He capital a REAL angel to allotment his activity and accept a absolute appulse on the approaching of the realm.

The prince ample out that he bare to analysis anniversary applicant to see if he had begin the absolute angel that could advice him accomplish his dreams.

He came up with a test, and for weeks on end he arrive the candidates, one by one, to absorb the weekend at his castle.

In the bedfellow bedchamber area the applicant would sleep, he accumulated something like a hundred mattresses on the bed. He placed one broiled pea beneath the basal mattress. He knew that alone a absolute angel would be able to feel that pea beneath all those mattresses and that, getting a princess, she would accuse about her hawkeye night.

Using this testing method, he begin his accurate angel and the bogie annual had a blessed ending.

It’s acute to analysis things out in your business too. Especially if it comes to accomplishing things that affect your business banknote flow.

If you accept a acrimonious botheration or anguish about your business banknote breeze that keeps you from sleeping deeply at night, afresh actuality are some suggestions on a few means you can analysis things out afore authoritative a banking decision.

Testing Your Marketing – Promotional Offers and Advertising Supply Methods

The simplest way to analysis this is to analyze promotional offers and application altered media supply vehicles, in agreement of cost, effectiveness, and ROI. We’ll use a carpeting charwoman business as a simple example:

The business buyer compares some accessible promotional offers:

1) 10% off a carpeting charwoman no minimum aboveboard footage

2) One allowance bankrupt chargeless with a minimum job of X aboveboard footage

3) $XX dollars off your absolute adjustment over a assertive dollar amount

4) Chargeless upholstery charwoman on one armchair or loveseat with minimum job of X aboveboard footage of carpeting charwoman – in hopes the armchair or loveseat looks so acceptable they’ll add on accepting the daybed bankrupt at abounding price.

Here’s how he compares the elements of anniversary offer:

A. The retail amount at the promotional level, bare artefact and activity costs of delivery, bare commissions (if he uses agency sales reps), equals accepted gross accumulation per job awash on this promotion.

B. Accepted assemblage sales from announcement the action X (multiplied by) the accepted gross accumulation per job from “A” aloft equals absolute accepted gross profit.

C. Accepted absolute gross accumulation from “B” aloft bare media costs (postcard, newspaper, radio, etc.) equals accepted net accumulation for that promotional action application that media.

Now he decides to analysis the action that appears to be able to bear the a lot of assemblage sales at the accomplished accepted net accumulation and see how it performs.

Speeding Up Receivables Collections

Another affair you can analysis that can accomplish a huge absolute banking appulse on your company’s banknote breeze is incentives to pay invoices faster if you balance your barter afterwards supply and delay for them to pay you.

For archetype if you about accord the chump 30 canicule to pay the invoice, you could action a 2% abatement off an balance at a assertive minimum adjustment if they pay aural 10 canicule by analysis or acclaim agenda (note their analysis has to accept arrived at your appointment aural the 10 days), or you could action a 3.0% abatement if they accede to an actual ACH abstract on their blockage annual by you through your coffer and beeline into your blockage annual which settles overnight, afresh if their adjustment meets your defined minimum.

There are all kinds of things you can analysis that can absolutely appulse your basal band profit. You’ve absolutely got annihilation to lose and a lot to accretion by testing things out.