Increase Sales Increasing sales is a sure fire way to increase your throughput and is theoretically limitless. My first question is: Are you selling all that you can now? If you are a “make to stock” company, do you ever have the case where you don’t have the product...
Increase Selling Prices Changing the selling price for a product or group of products is difficult to cover in few words. Presumably you already have pricing policies and strategy that represent some equilibrium point in the market you serve and getting some minimum...
Continuing our cash velocity discussion... Deceasing sales commission is not necessarily where we want to focus either, but make sure that the commission you’re paying is in alignment with where you’re making your money and/or with the products/services with the...
Continuing our cash velocity discussion, let talk about Increasing Throughput. Throughput (as defined in Goldratt's Theory of Constraints Throughput Accounting) is sales revenue minus truly variable costs. Therefore we can increase your throughput by either 1)...
Continuing our cash velocity discussion started on March 16, 2007Yesterday we discussed how offering a discount can reduce cash to cash cycle time and today we will discuss an alternative.Another approach, which leads to similar results is receivables factoring....
Last time (on Friday) we talked about offering a discount to our customers if they paid on delivery. What kind of discount could you offer to get cash back into your system faster so that you could make more money? Before you answer that question, also consider that...
The Goal, orginally published in 1984 is the best selling business book in the world. You can still walk into most books stores and find a copy on the shelf. Right now, it is selling really well in Japan. The BusinessWeek Best-Seller List -- Paperback Business Books 1...
Now let’s look at the impact on what we discussed yesterday had on our throughput. Let’s say we immediately visit a customer whose complete order was shipped and had just been received by that customer. We make, and they accept, our 20% Discount Mafia Offer and we...
Reducing Float for the Cash Constrained Company Now let’s consider a case where there is a cash constraint. When cash is your constraint, going out of business is usually not far behind. Most small businesses go out of business because they have run into cash...
The Role of Payment Terms in Cash Velocity To reduce the time it takes to collect payment from our customers we offer a 1%/10 option, but none of our customers use this option and many of them pay late which is why we have an average of 42 days. So we remain at 55...
