Working with Customer

When I attend to my performance evaluation this year I received a high score due to my relationship working with customer. Yes this is right finance manager and CEO need to spend more time with their customer. We are the best person to advice how to have a win-win deal without compromising our margin and still reduce customer cost of ownership. But this require allot of strength in financial and operation knowledge.

But allot of times CEO is also the first enemy of the customer. This is because we control their customer account and have the final say on their credit.

My advice: Keep professional relationship and times take tough action when customer default payment.

What share holders look for

Council for Customer Account

Bad Debs Impact to BS, P&L and Cash Flow

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• This is not rocket science, it pretty simple when account receivables at risk on balance sheet you need to provide provision for bad debts in P&L, which will reduce your profit.
• With this two impact your cash flow will also suffer with lower collection
• But there is few thing you should consider in order to minimize the impact on net income:-
  
  - The methodology should be consistent
  - Provision for bad debs should be booked quarterly, this is because you don’t want your balance sheet to change drastically when you book monthly. And booking at year-end is too late to analysis.
  - Finally the reserve should be held in general ledger and not at sub-ledger because customer should not be aware of this reserve on their account.
  
  

Operation Excellence Impact to Cash Flow

• Cash flow is more important then operation margin for long-term survival of organization
• The major cash flow funding for a business is working capital
• Shareholders investment or long-term bank borrowing is used to pay expenses and payables for inventory
• Then sales and collection on receivables is an important cycle to a working capital self-funding
• As a CFO’s, we need to make sure receivables are in our control. Dashboard and turns are important measurements that CFO’s needs to look at and delivery monthly
• Through operational excellence in six sigma, lean, TAT, productivity saving organization can free up working capital
• This chart is example in a supply chain business, reduce waste and focus on value process enhanced customer value and reduce cash flow requirement