06Optimise
Most improvement programmes target cost, because cost is the most visible lever.
Late payment costs the UK economy almost £11 billion a year, and around 14,000 businesses, 38 a day, close as a direct result. Cash is not an administrative problem in a smaller business. In a smaller business, cash is a matter of survival.
Optimise in practice
We look at price, customers and mix first, then cash, cost to serve and the capital the business is committing.
Meanwhile the price list has not changed in three years, the discount policy is undocumented and no one can say which customers are profitable to serve.
Our approach
So we look at price, customers and mix before we look at cost. Then working capital and cash conversion, then cost to serve and the capital the business is committing. Growth and margin are the same conversation, not two separate programmes.
Our experience
We have run the commercial and the operating side of this in businesses we owned, where margin and cash were ours to find, and inside large organisations where the same levers had to be pulled across a cost base of scale without breaking service.
What we do as owner
Price, customers and mix first, then cash. Cost comes last, because it is the easiest to see and usually the least of it.
- Pricing, discount discipline and commercial governance
- Price realisation: what is listed against what is collected
- Discount authority, so margin is given away by decision rather than by habit
- Gross margin by product, service and customer
- Price increases planned and communicated, rather than avoided
- Procurement and supplier renegotiation
- Customer segmentation and customer profitability
- Key-account growth, cross-sell and upsell
- Retention and churn reduction
- Sales-force effectiveness and sales productivity
- Revenue operations, CRM discipline and pipeline management
- Route to market, channel effectiveness and product mix
- Working capital, receivables and inventory
- Late payment and collections discipline
- Cash conversion and cash forecasting
- The cash conversion cycle as one number the board watches
- Capex governance, maintenance versus growth
- Capital allocation and investment prioritisation
- Cost to serve and network economics
- Throughput, OEE and flow
- Spans, layers and overhead
- Technology run-rate cost
- What the business should stop doing altogether
- Service model, service levels and support
- Field-service effectiveness
- Complaint root-cause reduction
- Customer onboarding and renewal management
For owners who are not seeking a sale, the same capability is available as an executive mandate through Advisory.