How your clients can improve their gross margin and debtor days
13/07/2010 12:04:16

Figures for gross margin and debtor days can be improved by working on pricing and how the business gets paid.

• If the business normally invoices for payment and these are slow to come through, suggest asking for payment up front. This could be presented to the customer as a way for resources to be focused on the care and servicing of good customers and not on chasing bad debts and late payers.
• Offer discounts for early payment or additional benefits instead. For example, depending on what type of business it is, they could offer priority booking, free upgrades, lower minimum order quantities, extra technical support.
• Have they defined their USP and promoted it to their customers? If their product is similar to many others then perhaps their USP is their brilliant customer service or their after sales support. If they sell something unique, are they making the most of the benefits it offers (not just the features)? All these can make a difference to the prices they can charge.
• What about a 1% increase in prices? It could just be on certain products or for certain customers, but it will have an effect on profitability.

And if you could benefit from some fresh ideas in these areas yourself, take a look at this article on nine ways for accountants to improve cashflow.