David Taylor

All companies strive to increase profit. So, I have often wondered why I have seen so many companies – from large multinationals to middle-markets to stable startups – who miss opportunities to add 10% to their bottom-line profit with some very simple actions. Here are three not-so-secret tips, based on the principle Control Drives Profit , how your organization can add to your bottom-line profit.

Cashflow

Let’s be honest, managing Cashflow is often relegated to a bookkeeper or entry-level accountant. Senior Accountants, Managers or Executives may review certain aspects of Accounts Receivable or Accounts Payable – such as Average Days Outstanding to see how fast receivables are coming in – but not so much the day to day inflow and outflow. It is the bookkeeper or accountant that has to manage the myriad of invoices, notices, follow-ups, bank statement reconciliations, etc. These people work hard and are most often highly competent. However, competent people still have limitations. Your accounting department is being inundated with invoices and bills from multiple directions and through many media channels. In this chaos, the truth is, invoices do get lost or don’t get billed at all.

Profit Tip #1: Have a streamlined process within your company, across all departments, so that your accountants have a single source through which financial information is transmitted.

Imagine you are billing $100,000 in a month. If you add one additional invoice for $2,500 per month that was previously forgotten or misplaced, you’ve likely just added 10% to your bottom line. Before you cry foul and claim incompetence on the part of an employee, let me say that I have seen a situation where $86,000 of reimbursements went unbilled for over two years. The accountant responsible for the account was highly skilled and competent and I would hire her again if the chance arose. The fault lay, in fact, in the financial control process which was disorganized and decentralized. The Executives and the accountant didn't stand a chance when the financial control process on which they relied had been patched together, over time, as needed (sound familiar) and included inherent flaws.

Budgeting

Most companies that I have seen, no matter how big or small, are not good at budgeting. The simple fact is that they manage expenses in retrospect or in relation to income. More often than not, I’ve seen Executives look at the amount that is spent on COGS and then check to see if it is within an “acceptable margin” of expense. Of course, someone may be watching individual expenses to make sure that things are not overcharged or are reasonable, but that just means that the company takes a micro and a macro perspective, not necessarily a holistic perspective.

Profit Tip#2: Prepare an itemized budget for how much will be spent on both COGS and SG&A

Not having a budget means that it is much more difficult to control costs. There will always be new expenses popping up that seem necessary or reasonable. (eg. “We NEED this new software to do our job” or “Of course we HAVE TO HAVE this fancy marketing material.”) Some of them may be necessary or reasonable; however, without a budget there is no benchmark against which to measure. A forward-looking, itemized budget can only come from having good financial control in place. For instance, I worked with a company that reduced expenses by 15% after going through a bottom-up budgeting exercise. These savings directly impacted the company’s bottom line.

Sales Forecasting

Unlike Budgeting, Forecasting seems to have everyone’s attention. The moment that a new business idea is hatched, there is a person there to ask, “How much do you think it will make?”. When Sales targets are set, salespeople – at least the one’s that I know – seem to be self-motivated to go out, find new clients and close deals, supported by various marketing initiatives. Certainly, this is an important part of your company’s growth and future. I have seen, however, one simple way to find sales opportunities that often get lost in the confusion.

Profit Tip#3: Cross-reference client information in your Sales and Accounting systems for upsell, cross-sell and re-sell opportunities.

I witnessed a case where a comparison of the contacts in a Sales CRM system with the Accounting system yielded over 1000 leads that were not currently being marketed to or contacted. Basically, these were warm yet untapped leads! For a point of reference, this company’s prior year revenue came from sales to about 300 clients! In this case, it is easy to imagine that if just a fraction of these leads purchased new product, there could be a significant increase to the bottom line.

Control Drives Profit

I am aware that the above may seem obvious to many. Yet, time and time again, I see companies fail to capitalize on these basic opportunities. It begs the question of why. It is my experience that, as simple as these tips are, there is a required level of foundational financial control to even be able to find and capture this easy profit. In any business, Control Drives Profit and is requisite for scalability.

Let’s Connect

Please feel free to share if you have a story about easy ways to increase the bottom line through financial control. If you feel that your organization could benefit from better foundational financial control, contact us to learn more about how we can help and about our unique EDSSESSMENT process, a unique blend of education and assessment.

David Taylor

Salt Lake City Metropolitan Area 1K followers 500+ connections

See your mutual connections View mutual connections with David Sign in Welcome back Email or phone Password Show Forgot password? Sign in or New to LinkedIn? Join now or New to LinkedIn? Join now

About

Experience

Biolexis Therapeutics, Inc.

-

-

-

-

-

Education

NYU Stern School of Business

Recommendations received

David Bearss Ph.D.

Marypat Davis

View David’s full profile

Other similar profiles

Jon Coriell, MBA

Jonathon Angell

Rebecca Holderread

Steve Cassady

Luis F. Pereira, Jr MBA, MSc

Daniel J. O'Donnell, MBA, FACHE

Jeff Manz, MBA

Sam Francis

Ali Raza

Akhtar Khan FCA

Brian Compton

Gershon Morgulis, MBA

Larry Grant, CPA, MBA

Lyndall Medearis, Jr.

Maria (Blanche) Fernandez

Matt Weiler

Matt Unterman

Lindsey Burton

Benjamin Friedman

Jeremy Zeman

Explore more posts

Explore collaborative articles

Others named David Taylor in United States

David Taylor

David Taylor

David Taylor

David Taylor

David Taylor

Add new skills with these courses

Corporate Finance Foundations

Excel for Corporate Finance Professionals

Financial Modeling Foundations

Salt Lake City Metropolitan Area

1K followers 500+ connections

View mutual connections with David

Welcome back

Email or phone

Password

Forgot password?

or

New to LinkedIn? Join now

or

New to LinkedIn? Join now