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"Strategies for Enhancing the Primary Concerns - Spend Analytics & Marketing Cost"

Improved Bottom Line

Bottom line of business is its net income, or the "bottom" figure on a income statement. It’s company’s income after all expenses have been deducted from the revenue.

Management uses different strategies to increase the bottom line. Normally, increase to revenue increase the bottom line which may be achieved by

  • Increasing production
  • Lowering sales returns through product improvement,
  • Expanding product lines or
  • Increasing product prices.
  • Other income such as investment income, interest income, rental

A company can also increase its bottom line through

  • Spend Analytics for cost control and reduction
  • Working Capital Management

Techniques for improving the bottom lines

  1. Spend Analytics
    • a. The reduction of expenses.
    • b. Operating out of less expensive facilities,
    • c. Utilizing tax benefits, and
    • d. limiting the cost of capital
    • e. Hire an expert
  2. Controlling the Marketing Cost
    • f. Focus on your high value customers
    • g. Stop spending money on acquiring low value customer,
    • h. Run conversation driven campaigns instead of traffic driven
    • i. Test your Assumptions
    • j. Calculate the Return on investment of everything your do
    • k. Hire an expert
  3. Working Capital Optimization

The funds required for day-to-day working (Operations) is called working Capital of the business and calculated as the current assets minus the current liabilities.

Working capital is a common measure of a company's liquidity, efficiency, and overall health as it includes cash, inventory, accounts receivable, accounts payable, the portion of debt due within one year, and other short-term accounts.

Positive working capital generally indicates that a company is able to pay off its short-term liabilities almost immediately. Negative working capital generally indicates a company is unable to do so as it suggests a company is becoming overleveraged, is struggling to maintain or grow sales, is paying bills too quickly, or is collecting receivables too slowly. Increases in working capital, on the other hand, suggest the opposite.

One of the most significant uses of working capital is inventory. The longer inventory sits on the shelf or in the warehouse, the longer the company's working capital is tied up.

When not managed carefully, businesses can grow themselves out of cash by needing more working capital to fulfill expansion plans than they can generate in their current state. This usually occurs when a company has used cash to pay for everything, rather than seeking financing that would smooth out the payments and make cash available for other uses. As a result, working capital shortages cause many businesses to fail even though they may actually turn a profit. The most efficient companies invest wisely to avoid these situations.

Working Capital optimization focus on

Receivables Management:

  • l. Go after slow customers but focus on those with the most ability to pay first.
  • m. Focus on overdue Debts & Defaulters
  • n. Change the Credit terms
  • o. Offer Cash Discounts for early payments

Inventory Management

  • p. Identifying fast moving, slow moving and dead items & maintain optimal inventory level
  • q. Maintain balance between Carrying Cost and loss from stock outs

Payable Management

  • r. Identify suppliers who can afford payment extensions
  • s. Get cash discounts by making payment of surplus payment
  • t. Extend the credit terms
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