Blood Pressure and Business Pressure
Why every exec’ should be watching their numbers
Whether you are the CMO, the CEO, the business owner or all three, every executive should watching their numbers. It’s not enough to glance at a financial report at the end of each month. Today’s markets can change on a dime – and do.
A healthy business is where the executive team knows each day how well the numbers are performing. Here are 5 great area where staying on top of the numbers can pay off handsomely:
- Credit Score: A low credit score costs you money. This includes being declined a loan, incurring higher lending rates and even higher rates on business insurance.
- Total Expenses: Do you really need to incur that expense or can you outsource, leverage technology or lease a solution? There are many options today for forgoing and minimizing expensive capital asset purchases.
- Accounts Payable Turnover Ratio: Are you paying on time? Are you paying slower than you did last quarter? Are you missing payments? Your suppliers will notice these things and as a result, may offer you less credit, charge you more or place the importance of your business lower than its other customers.
- Profitability Ratio: Understand the difference between increased sales and profitability. This is because when sales go up, more often than not, so do costs. You might generate $100,000 more in sales in a given month, but if it is the result of heavily discounted pricing, your costs can exceed the additional revenue.
- Inventory Turnover. Is your inventory sitting on the shelves gathering dust while your loyal purchasing agent keeps ordering more of it? If so, it’s likely costing and wasting you money. It costs to hold it and it wastes money by eating into your profit margin and tying up cash flow that could be used in other, more useful ways.
Regularly monitoring these areas will help you to optimize profits and minimize costs. It will also help you to stay on top of cash flow. When cash flow is low, which is often the case during high growth periods, you will be in a better position to plan ahead. This includes taking advantage of tools such as invoice factoring, which allows you to sell your invoices so that you can receive immediate capital rather than waiting to receive payment from customers.
As an informed business executive, remaining on top of business pressures makes it a lot easier to stay on top of your blood pressure.