Secrets of Balance Sheet Optimization

This is a guide to exploiting Balance Sheet Optimization secrets developed and perfected over a 35-year period by one of the foremost leading authorities - secrets developed in Western Europe and North America but also with direct relevance to Eastern and Australasian Trade. Whether you are a Business School Graduate’ an intern in an Accounting role, a Chief Accountant or a CFO or have a business background or aspirations you will benefit from these secrets. This publication gives you a "running" start to implementing these secrets thereby enhancing value to any employer. If the reader only implements one of the 40 secrets the benefit will be immediate. Often one hears about “benchmarking” in business, but what does this really mean? Neil G Van Luven covers this expertly in clear and concise language that everyone can understand. The book includes concepts of what constitutes and how to “maximize working capital performance, explained in understandable terminology. These topics are explained, including best practice customer satisfaction issue handling; interpreting billings/receivable trends; training the trainer, prepayments, and their importance; impact of eCommerce; how to improve customer and supplier relationships, making sales commission policies work best, credit insurance; payment vehicles; centralization;

Here is one excerpt:

..... Terms and Conditions – Gateways to the Customer/Supplier Relationship and maximized working capital performance

The terms and conditions which organizations attach to the goods and services that they sell and likewise which they are provided with on their purchases are critical to the cash flow process. From the sales perspective, terms and conditions that are more stringent than those offered by the competition in a highly competitive segment can suffocate growth. Conversely, from the accounts receivable perspective, if terms and conditions are too liberal potential cash flow optimization can be forsaken. From the accounts payable perspective, it is essential that maximum time be taken before payment without alienating the supplier relationship.

Accounts Receivable
In the modern technologically advanced and hypercompetitive business environment an enormous number of factors need to be built into the organization’s credit terms and conditions policies. Among the factors that need to be considered are:
• Are our terms and conditions concise enough? Many organizations have too many term variations due to historic accumulation and the result is often confusion. Simple straightforward menus of terms are required; if one credit term is sufficient do not provide two.
• Do the terms and conditions address the realities of the customers for whom they are intended? If you are selling goods or services to public sector bodies in a country that mandates by law, that public sector bodies must take 90 days or more to pay, terms of less than 90 days will not work.
• Do the terms and conditions take into account any special requirements? In some countries, for example Italy and Spain, public bodies’ payment clocks do not start until after a Ready-For-Use certificate has been issued. Terms must consider that factor to ensure that invoices are not treated as past due when they are not.
• Do the terms and conditions provide early payment incentives that are both attractive to the customer and beneficial to the organization? Early payment may be possible with certain incentives but is it financially prudent to offer them?
• Do the terms and conditions provide for prepayment options? Prepayment is becoming more and more acceptable, even in notoriously difficult blackspot countries, but prepayment will never be realized unless it is asked for.
• Do the terms and conditions conform to technological constraints imposed on the organization? If an invoice takes 10 days to get to a customer and terms are less than 15 days, there is a virtual certainty that payment will not be made