RIP Example 2: The Big Green Cash Cow
This was a RIP designed to reduce average collection days in a manufacturing company with approximately $7 million in annual revenues.
■ KPI: Average Collection Days.
■ Quantifiable Objective: To reduce Average Collection Days by 20 (from 60 to 40) in 90 days.
■ Financial Effect on the Company:
• Increase available cash by $600,000.
• Increase GM (annually) by $20,000, since the cash is now available to take discounts that suppliers offer with early payment to them.
• Reduce interest expense by paying down debt ($24,000 in annual interest savings).
■ Actions:
• Produce clear, accurate, and timely invoices.
• Ask for deposits and/or progress payments.
• Introduce a seven-day customer service phone call (seven ...
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