Cash Flow
Cash flow is the lifeblood of a company. If it cannot be accurately predicted,
the loss to a company can be significant. For example if we assume that
normal credit terms are 30 days for every day month that a million pounds is
unpaid it loses the company as much as £6,500 in lost interest (assuming an 8% interest rate).
All companies should be measuring collection performance and normally this
would be Debtor Days (also known as Days Sales Outstanding or DSO). Unless a
credit manager is targeted to a specific and realistic DSO each month, neither
he nor his staff know what is required of them. Given a goal, most people will
perform and it is only things outside their control that stops them from
achieving. SLM can introduce procedures that give accurate targeting and
by training and working with staff enable them to achieve the best possible results.