Get More Money Now
We are in a challenging time. How do publishers cope? Creativity and innovation are more important than ever. For publishers to have the financial flexibility to focus on the things that will really drive their businesses forward, it is particularly important that the basics get done well.
This article provides 12 actionable suggestions to help you increase profitability and cash flow, including:
- Suggestions for improving your cash flow through better working capital management.
- Cost efficiency and getting the basics right. For example, does your rate base make sense?
- Owner-operator compensation strategy. Don't overpay your taxes.
- Thinking about your business strategically. Do not allow your organization to become complacent in this challenging environment.
Improve Your Cash Flow
1. Better collection of advertising and other receivables. Remember, the sale is not closed until the money is in your bank. If your receivables are $500,000 and the days sales outstanding (DSO) are 50 days, gradually improve your DSOs over a number of months to 45 days. If you have DSOs of 40 days, gradually improve them to 35 days. In each case, this would result in additional cash flow of $50,000.
How do you do this? In the case of collecting receivables, the "squeaky wheel" gets oiled. But diplomacy is also essential. A few quick suggestions:
- There should be a collection person who makes collection calls and does credit checking on new customers. Salespeople should never be the primary collectors; they should be selling.
- The entrepreneur or CFO should spend an hour once or twice a month with the collector to review the status of accounts. Most people do not like to make collection calls, and this internal meeting will reinforce the importance of collecting receivables.
- Make a "customer service"-oriented call before the invoice is due. The purpose of this call is to check whether the client payable person has received your invoice and tearsheet. Why wait until the invoice is past due to find out?
- There should be a (polite) call shortly after the due date—again, from the publisher's receivable person to the client's payable clerk.
- There should be additional calls at two- to three-week intervals.
Remember that your goal is to reduce DSOs by five days. For example, moving the 80-day DSO client to 75 days helps greatly with the averages. You are not, however, going to move the 80-day DSO customer to 45 days; take some "baby steps" with the entire portfolio of accounts. They add up.