It is vital to monitor actual performance against budget and calculate key performance indicators such as:
- Length of order book
- Sales compared with budget or last year
- Profit margins
- Stock levels and stock turnover
- Debtor days and overdue collections.
We have noted 7 bad practices that every business needs to avoid:
- Taking on financial commitments before you can afford to pay for them.
- Undertaking large amounts of speculative work in the hope of making a sale.
- Overstating stock, WIP or fixed assets in your management accounts.
- Not planning for major expenses you know will arise. .
- Failing to prepare cash flow forecasts, particularly in today’s difficult market.
- Failing to agree all the details of an order, leading to a customer dispute.
- Poor credit control system, starting with credit checks before taking the order.
How do you score on these 7 bad practices?
Please telephone your main contact at Crowthers if you would like to discuss how we can help you to improve your business systems.