On this page
- Review your buying policy
- Ways to increase sales
- Review your invoicing procedures
April is the month to check your buying policies, prices and commissions are all in step to maximise profits and minimise costs.
Review your buying policy
The way orders are placed for stock or services can impact sales, cash flow and profit.
How to do it
- understand which services or stock are 'core' to your business
- tighten the ordering of services and/or the buying of stock so that you always have what you need, when you need it, without excess stock or empty shelves
- negotiate with suppliers
- beware of discounts offered.
When working with suppliers to manage stock:
- use a stock control and inventory system that helps you manage your stock, including items you must never run out of, so that you can keep sales momentum. Your customers should never be disappointed about your key products
- prioritise your needs from suppliers - do you need fast delivery, good quality service or product, lowest price etc. Often you'll find a supplier can provide speed, quality or price but rarely all three
- negotiate deals with suppliers but avoid volume-based discounts unless you have good cash flow
- don't let discount prices drive your buying decisions. Keep in mind your cash flow and only order services or stock as you need it unless your cash flow allows.
Look at ways to increase sales
If you can increase sales, then both profitability and cash flow will benefit.
How to do it
- review the pricing of your stock or service
- look at services or products that can be packaged together
- review any commissions or agents fees paid on sales
- review your discounting policy.
When setting or reviewing prices:
- have a pricing strategy in place
- compare your sales price to your competitors - a small increase in sales price is often acceptable to your customers
- remember that companion selling and upselling will increase the overall sales
- use promotional tools such as signs and direct marketing to highlight specials to drive sales
- review commissions and agents' fees against the sales items to ensure they are encouraging high margin sales
- understand how discounting impacts your bottom line. Discounting sales can erode profits and cash flow.
Review your invoicing procedures
The way your customers receive their invoices can influence the way they pay - good invoicing will ensure more prompt payments.
How to do it
- review how your invoices are set up. Do they have all the necessary information for the customer, including payment methods?
- look at how frequently invoices are sent. Send the invoice with the completed order delivered. Don't wait until the end of the week or month as this will add to the days outstanding for payment
- review the procedures you have in place for customer disputes. The more quickly you settle any issues, the sooner you will get paid.
Want a financial reminder in May?
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