|
Q |
What
does DSO mean? |
| A |
DSO
stands for Days Sales Outstanding. It is a measure of how many
days’ worth of sales you have outstanding in your accounts receivable
balance. |
| |
|
| Q |
I
have only 5 employees. Why should I have an Employee Policy
and Procedure Manual? |
| A |
The
best reason to have a policy and procedure manual is to ensure
that all your employees are treated in a consistent manner.
Without a published document, it is too easy for a business
owner or manager to forget whether he allowed Joe extra vacation
time, so when he denies that extra time to Sam, it could spell
trouble. Employees who are treated consistently are less able
to prove discrimination or disparate treatment. |
| |
|
| Q |
My
customers don’t pay me on time. How can I send them the message
that late payments aren’t acceptable? |
| A |
One
of the most effective techniques I’ve found, especially for
larger invoices, is to call the customer a few days before the
invoice is due. Say that you are calling because you noticed
that an invoice is coming up due and you want to make sure that
you’ve provided everything that your customer needs to pay the
bill on time. This avoids any adversarial conversation, but
sends a strong message that you expect to be paid on time. |
| |
|
| Q |
I
sell three products and I want to know which of them is the
most profitable. How can I find that out? |
| A |
You
want a product line profitability report. Your request for
one indicates a high level of awareness on your part about the
ramifications of different product lines with different cost
structures and profit margins. To develop this report, you’ll
need a mechanism by which you can capture sales for each product
and you’ll also need to capture the cost of sales for each product.
Exactly how you do that will depend upon the kind of cost system
you are using and the kind of software you use to track that
information. The end result should be a breakout of your total
cost of sales by product so you can calculate a gross margin
percent for each product and compare that to your overall gross
margin percent. |
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|
