PKF Texas – Entrepreneur’s Playbook®:Improving Profitability

by | Jan 22, 2010 | PKF Texas - The Entrepreneur's Playbook®

Note: Running Fridays in FromGregsHead.comis a continuing series of tips brought to you by Greg Price. These run Saturday mornings during the BusinessMaker’s Radio Show on KPRC 950AM. Audio files can be found on the PKF Texas – Entrepreneur’s Playbook® page of the PKF Texas website. 

As organizations work through their 2010 budgets and we see the economy teetering back and forth on the edge of pulling out the recession or falling back into it, one of things on the minds of most CEOs is: “How can they improve the profitability of their organization?”  One of the answers is to get better information from your accounting system.

At a customer site we started doing some analysis of their sales revenues and customers.  The controller was our sponsor, and was looking to use the power of their new dashboard reporting tool we implemented at their headquarters to tell them more about their business.  One of the items they were challenged with was knowing whether or not, a customer was profitable. 

Our dashboard reporting tool indicated that they were showing some profitability on 40% of its small customers and approximately 75% on its larger customers.  Having never had this information before, the controller went down the hall and visited with the VP of Sales and a plan was developed to redesign sales processes.

With our help, we redesigned the process to focus on value and cut waste.  More time was spent in directing the smaller customers to web based support/ordering and large customers with more commodity based sales also to web based support/ordering.  Reducing back office support on these areas allowed the organization to cut costs by 35% on the smaller customers and 7% on the large ones. Larger customer profitability increased by 20% and smaller customer profitability increased by 100%.

If you are not getting this information from your accounting system, you should contact us.  With Dynamics NAV and our dashboard tools, we can help bring that type of information to the forefront.

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