Business Costs – only when You Know Your Costs can You Control and Reduce Them

Business costs have a large impact on your bottom line. Many companies are not aware of their exact costs. Simplified accounting systems provide financial information after the fact. Often a financial statement that shows your bottom line is not available until 30 days or more after the end of the month or the year. Changes in your financial position do not show up until after they have occurred and it is too late to stop costs and eroding margins from eating away at your profits.

In order to control and reduce your costs, you need to know exactly what they are. A business solution that provides immediate, accurate and complete executive information on your costs and profits is critical. Here are some examples of how you can have better visibility to your costs and take control to reduce them.

•    A more robust business solution can provide you with an alert of a critical condition that will affect your financial position at the time that it occurs. This allows you to correct the problems as they occur.

•    Real time financial information that displays in an executive dashboard or portal allows executives to monitor your financial standings. This allows you to take immediate action and make changes before a problem affects your profits.

•    Automatic approvals and order holds can be set up to stop sales that fall below an acceptable margin before they occur.

•    Products or raw materials can be set up for approval when a cost has risen beyond an acceptable percentage.

Getting control of your costs is a major source of new profitability today and for the future.

Worth a look – Simple, Powerful, Online Database

We ran across a new business tool recently – TrackVia.    TrackVia is definitely worth a look.  It has great functionality – turning an MS Excel spreadsheet into a fully functional database in just a few minutes.  See the demo at http://www.trackvia.com/index.htm

Improve Your Contract Management and Cycle Billing

Contract management and cycle billing is the life blood of a service business.  With your bottom line dependent on quality customer and equipment management, relying on an ineffective spreadsheet or manual entry system is no longer an option.

Automated data capture of meter clicks, cost per X billing and inventory management requiring minimal manual entry will ensure timely and accurate cyclical billing.

An effective contract and cycle billing system provides:

• Customer self service with meter entry via the internet or mobile device.
• Renewal contracts automatically generated based on contract expirations.
• Effective and easy invoice generation for contracts and meter billing.
• Automated machine to machine communication for meter reads.
• Business alerts if meters read with suspect conditions.
• Remote technician read functionality to cross-reference billing and/or rebilling.
• A single invoice regardless of the configuration, including multiple meters on multiple machines.
• Cost per X revenue allocated to labor, parts or consumables.
• Consumable management and profitability assessment.

Integrate Your Service Management and Remote Technicians

Coordinated service management and service dispatch is important for managing technical departments, maximizing service revenues and ensuring customer satisfaction. Solutions that allow service issues to slip through the cracks or prevent technicians from accessing critical customer service history can destroy productivity and profitability.

Integrated service and dispatch management, combined with remote technician communications, can maximize service revenue, customer satisfaction and technician productivity; and is vital to growing your business.

An effective service management solution:

• Allows a service dispatcher to quickly access customer service history, contract details, and account information.
• Includes the automatic dispatch of remote technicians via the internet or mobile device.
• Provides business alerts that notify service management of preventive maintenance situations and late service issues.
• Will reduce the number of call backs due by calling attention to frequency of visits, parts issues and suspect conditions.
• Measures the number of clicks between calls, by equipment, and by technician.
• Understands the billing parameters of your equipment.
• Ensures full reimbursement for warranty parts with effective equipment and parts management.
• Provides effective measurement of technicians for better management and training purposes.

Lost & Found – Quicker Collections, Quicker Profit

In this Lost & Found, we will look at the problems you encounter with your AR Collections and how it affects your cash flow and your profit. Even in good times, many customers are slow to pay. With the current economic situation, you may see collection times lengthening even more as your customers begin to conserve their cash.

Many companies’ collection process consists of reviewing customers with past due balances on an aging report at month end. Time is needlessly spent looking at all the current AR trying to find what is past due. Calls are then made to collect these balances. Invoices that became past due early in the month, may already be up to 30 days old.

What would the benefit be if you could reduce the days of outstanding past due balances? With tools such as an automatic alert, you could be notified every morning of the past due invoices as of that day. This could greatly reduce the time it takes to collect the cash that is due to you.

There are many other ways to improve your cash collections, but how does that affect your bottom line? Fill in the blanks below and see how much your company can increase your profit by improving your cash collections.

Variable	Example	Your Business
Current Annual Sales	$2,000,000	$
365 Days Per Year	÷ 365
Average Daily Sales	$ 5,479	$
Current Days Outstanding	x 60
Total Current Cash Outstanding	$ 328,740
Average Daily Sales	$ 5,479	$
Anticipated New Days Outstanding	x 10
Anticipated Cash Outstanding	$ 54,790
Total Current Cash Outstanding	$ 328,740	$
Total Anticipated Cash Outstanding	- 54,790
Total Improved Cash Collections*	$ 273,950*
Annual Return (Current Prime Rate)	x .07
Improved Annual Profit	$ 19,177	$

*This is additional cash that will be liberated from your AR.

Lost & Found – Dollars Lost in Inventory

In this Lost & Found, we will look at optimizing your inventory turns to reduce the amount of inventory on hand. An item whose inventory is sold (turns over) once a year has higher holding cost than one that turns over twice, or three times, or more. Increasing inventory turns is beneficial in three main ways:

• Reduce your holding costs so you spend less money on rent, utilities, insurance, theft and other costs of maintaining a product. This reduction in overhead costs will improve net income.

• Free cash trapped in excessive inventory by optimizing your on hand inventory.

• Items that turn over more quickly increase responsiveness to changes in customer requirements while allowing for the replacement of obsolete items.

There are many other ways to optimize your inventory besides increasing your turns. Fill in the blanks below to see how much your company can increase your profit by improving your inventory turns.

Variable	Example	Your Business
Annual Cost of Goods Sold	$1,500,000	$
Average Current Inventory Value	÷1,000,000
Current Inventory Turns	1.5
Annual Cost of Good Sold	$1,500,000
Anticipated Improved Turns	÷ 6
Anticipated New Inv. Value	$ 375,000
Average Current Inventory Value	$1,000,000
Anticipated New Inv. Value	- 375,000
Total Inventory Reduction*	$ 25,000*	*
Carrying Cost (10% industry average)	x .10
Improved Annual Profit	$ 62,500	$  _

* This is additional cash that will be liberated from your excess inventory!

Lost & Found – Lost Service Costs

In this Lost & Found, we will look at your service department and some of the typical problems facing a business with service technicians, in the field or in-house.

· Most service technicians keep a supply of parts on their service vans. What percentage of that inventory gets lost, or is consumed and not reported from your service van’s inventory?

There are several ways to automate tracking of inventory on service vans to reduce errors and costs. The benefits can be significant. Fill in the blanks below and see how much your company may save.

Variable	Example	Your Business
Average inventory per van	$7,000	$______________
Lost inventory % per month	x 5%	$______________
Total lost inventory per van	$ 350	$______________
Number of vans	x 6	$______________
Total lost inventory per month	$2,100	$______________
Number of months per year	x 12	$______________
Annual cost of lost inventory	$25,200	$______________

· Often a field technician will phone in the results of a service call for an administrator to close out, and then turn in the paper work at a later time for invoicing. In-house technicians misplace or lose service order paperwork. How often do technicians misplace the paperwork and the customer never gets invoiced?

By automating your service orders and setting business rules to track late or missing service orders, you can reduce missed invoices and improve your revenue and margins. Fill in the blanks below to see how much revenue your company is missing.

Variable	Example	Your Business
Monthly lost billing per tech	$300	$______________
Total number of technicians	6	$______________
Total lost billings per month	$1,800	$______________
Number of months per year	12	$______________
Annual lost service revenue	$21,600	$______________
Total Lost Inventory/Revenue	$46,800	$______________

A department of company can be like a leaky ship. How many leaks can you afford in your ship? Exerve can help you find and stop the leaks.

Inventory Optimization

How much excess inventory are you carrying today?  How confident are you that you are purchasing the right quantities for your business on today’s purchase orders?

Most businesses do not have a clear idea on how much excess inventory they are carrying.  Most do not know what the right levels of each item should be to meet their desired order fill rate.  Exerve can help.

Excess inventory is a depreciating asset.  Every dollar of inventory you can eliminate falls directly to the bottom line.

Our Free Inventory Optimization Review evaluates your current inventory, historical sales and inventory turns and forecasts future demand – seeking to identify obsolete inventory and optimal inventory levels for your operation. After our review, we will develop a short list of achievable objectives, some technology strategies, and of course, an improved cash flow estimate through inventory optimization. Let us help you find ways to maximize both your profit and your business potential.

If you are interested in extra cash falling to your bottom line, call Exerve today at 770-447-1566.  Optimize your inventory right now!

Start with the right solution for your business

Exerve StartRight™ – Start with the Right solution right now!

StartRight is a ramp-up program that allows you to start with the right solution – right now. Every tool you employ in your business should be implemented with your business’s future in mind. Many solutions look easy, but many times they are a trap – crippling the future growth of your business. With StartRight, you can start right now with the business management solution that can take your business from your first sale to your wildest visions of success. Whether you are a small business just getting started or a business that has a great history behind it, every business needs the right business management solution. Why start with software that cannot take you to the finish line? Don’t allow the illusion of simplicity today cripple your business’s future potential.

Lost & Found – The Cost of Shipping Errors

Lost & Found – Use our simple formulas to find hidden value in your business. In Lost & Found, we investigate an area of your business where you may be losing money due to unnecessary costs or lost revenue. We highlight a specific business issue and quantify the lost revenue or the excessive cost of errors to help you focus on areas where you can improve the financial health of your business.

In this Lost & Found, we will investigate what your company is potentially losing due to shipping errors. For any company that ships goods to customers, shipping errors are a fact of life. Shipping errors are costly in numerous ways. Some of the related costs include the inbound complaint call, return freight, receipt of returned goods and potential scrap of goods, accounting hassle, processing the replacement order, outbound freight and loss of goodwill and potentially future orders. What other costs does your business incur due to shipping errors?

There are many ways to reduce errors and the benefits can be significant. How much are your shipping errors costing your company? Fill in the blanks below and find out!

Variable	Sample		Your business
Average number of orders shipped per week	500		____________
Error rate (if 2%, enter as .02)	x .05		x___________
Your average number of weekly errors	25		____________
Your estimated cost per shipping error	$75		____________
Average number of weekly errors	x 25		x___________
Cost per week of shipping errors	$1,875		____________
Annualized cost of shipping errors	$97,500		____________
(multiply weekly cost by 52 weeks per year)

What did you find? How much would your business save if you reduced your number of errors by 50%? What are you going to do about it?