Case Study

Intro

Key Performance Indicators

 After going through the KPI module Jeremy realized his ability to track and measure some of his most important areas was virtually non-existent. He thought he knew them “in his head” but these were really just guesses and estimations not hard numbers.

Jeremy started going through the 12 areas of his business from the Sharpening  Assessment he had taken and saw the Finances section and he knew he could easily start there. Jeremy was great at making money but he wasn’t as good at collecting and tracking that money.

He noticed that his receivables were constantly late and slow to pay. This put a major strain on cash flow for the company and he found himself utilizing lines of credit and other debt creation options. Many times it was a stretch just to make payroll and that created unnecessary burdens on his staff.

Jeremy decided to create a KPI for receivables… 

CATEGORY: Finances

TITLE: No Receivables exceeding 30 days.

RECURRENCE:  30 days

RIGHT NOW POSITION: To maintain positive cash flow and avoid crippling debt and defaulted collectables.

BIG PICTURE: Maintaining a 30 day receivable collections policy prevents undue strain on payroll, operations and payables. Our company integrity stays intact as we treat our vendors the same way we expect to be treated and avoid hardship within our teams.

CONSEQUENCE: If the 30 day KPI cannot be maintained a decrease in the ability to serve our customers at the highest level will occur and this is not acceptable. This can directly affect those in the position of maintaining our 30 day collection policy including loss of performance bonuses and possible termination.

NEEDS TO KNOW: The Accounting department and specifically the Payable/Receivable team will maintain the monitoring of this KPI and report directly to account managers with collectible KPI monthly.

After Jeremy completed this first KPI he discovered that this was a relatively simple way to create a KPI and began to create a few more in his high priority areas from the Founder’s Flagship Assessment.

After six month’s passed Jeremy began to see the effects of closely monitored KPI’s. Receivables were all beginning to be collected within the 30 day policy. It wasn’t perfect yet but already there was a 60% decrease in delinquencies and that was amazing to Jeremy.

Jeremy also found out from his accounting team that they preferred this system and loved the whole KPI concept and have implemented numerous others in their department.

Jeremy continued to do this throughout the entire company. Everything from sales to parts inventory. He saw a tremendous increase in both his bottom line and the satisfaction among his teams.

Now, 3 years after implementing KPIs company wide, Jeremy is able to forecast upcoming trends and be fully prepared to capitalize on them. He can also pivot quickly when numbers begin to shift both for the positive and the negative. If you ask Jeremy now, he’ll tell you this is one of his best tools for recession proofing his business!