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We’re concluding a 4 part series on processes that affect your bottom line. We started with your sales process and then moved on to the production and delivery process. Today, we’ll be discussing your payment process. The goal here will be to look at ways to shorten cycle times, eliminate mistakes through improved processes and/or change your business model if you see a way to do things more efficiently.
Last week we did a deeper dive in to Shortening Cycle Times. This week we’re going to talk about how to eliminate mistakes. No matter what type of business you’re in, we’ve all made mistakes in our sales cycle, production/delivery cycle or billing/payment cycle. As we try to shorten cycle times, that means we’re going faster. Often mistakes occur when that happens. Your sales person quotes the wrong price or doesn’t have updated costs in his quote. Your production people miss the specifications of the client’s product and you’ve created waste. You bill the client for the product but don’t include shipping or freight. All these things have a negative impact on profitability. So, how do we eliminate mistakes?
Last week, we had an overview of “3 Tips to Manage The Madness In Your Business.” The first tip was shortening cycle times. Depending on the type of business you’re in, all of us have a sales cycle, delivery cycle and a billing/payment cycle. If you’re a product, manufacturing or contracting company, you also have inventory or work in process, which is included in your production cycle. In theory, if you are able to reduce the amount it takes to sell, make, deliver or collect your business can do more in the same amount of time.   Depending on your strategy and processes, you would choose to improve the cycle that has the most impact on your business either in financial or non-financial terms.
If you're like me, you're reflecting on 2015 and setting the table for 2016. What are you going to start doing, stop doing and keep doing? One of the ways of determining this is to look at the key metrics of your business to determine if you're on the right track for success or what changes need to be made to get back on track. The key metrics that you're using to make changes can become key performance indicators (KPI's) that you and your team want to track regularly. Here are the three things you must know about KPI's.
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