3 Pillars of Success

Business success rests on 3 pillars - sales, profit and cashflow. If your sales are inadequate, your business will fail - eventually. If your profit is inadequate, your business will fail - eventually But if your cashflow is inadequate, your business will fail - SOON!

Poor sales can be tolerated for quite some time - most businesses operate for many months, maybe years, before they achieve a comfortable level of sales (not that a good business operator is ever satisfied). If sales are low, you cut your expenses; you try to take less out of the business for yourself. You survive, even if only as a 'battler'.

Poor profits can likewise be tolerated for at least a fairly extensive establishment period. You may have to "buy" sales by cutting prices, until you have built up awareness.   Again, you battle, but you survive.

Poor cashflow is something quite different. You may have excellent sales. You may have healthy profits. But if your cashflow is inadequate, you cannot survive for very long (except by sinking more funds into the business). Try telling your landlord that your debtor's ledger is huge, but you have nothing to pay the rent with! Try explaining to Telstra that the business is extremely profitable, but you have no money to pay the phone bill. Under threat of eviction, with the phones cut off, how successful is your business now?

Healthy cashflows are more critical to success than either good sales or satisfactory profits. As an experienced operator, you know you have to manage cashflows as obsessively as you manage other aspects of your business.

And that means keeping your Accounts Receivable under a very tight rein and ensuring that you're not acting like a money-lender (interest free) to your customers.

Collect Australia does its very best work for clients when we are integrated into your Accounts Receivable function and operate as an extension of your own office.