Is too much cash locked up in the WIP in your business ?

OK, so you’re running a business. There are so many things to focus on : marketing, sales, making the product or service, getting in your resources to make/deliver it, billing, for some service firms such as lawyers and accountants building up the WIP (Work in Progress) which you can then bill. I am sure you can add to the list.

Yet people say ‘CASH is KING’. It is lack of cash that normally kills a business.

So, having lots of orders, having lots of WIP, even having sent out lots of bills, good as they are in themselves and essential for the healthy business, mean nothing if you cannot get the cash in. You want to shorten the time from order to cash in the bank. Many firms will focus on either billable hours or bills delivered. They will set targets and rewards according to those. With respect, the focus is wrong. Those aspects are essential, but it’s the cash you need. If you focus on and reward ‘cash in the bank’ then attention to the other aspects will follow. If you don’t focus on the cash you end up with problems : bad debt, inflated WIP recording, inefficient working practices etc.

What is your process for gathering in cash? Do you have too much cash locked up in the business ? How do you turn your WIP more swiftly into cash ?

A common problem in law firms is that management are too heavily involved in production – in actually doing the work. That’s natural, when you consider that they trained as technical legal experts and that is where they are comfortable, where value is seen. However, is it the best thing for a business if the managers are also the principal production workers. It is not common in most businesses.

Do you have the time and focus to concentrate on making the processes for gathering cash as smooth, efficient and effective as possible ? Perhaps getting someone in from outside to review, advise and implement might be the most effective way to bring about improvement?

"We at Spires Legal wholeheartedly recommend Ingemar and his team at Hunnings Consultancy Ltd. Ingemar has supported us throughout our journey from new start up to established firm. It is refreshing to have a consultant that takes the time to understand your business and its priorities, stands by your side as it develops and is flexible in approach as your needs change.
The feedback we have from our team, and which we regularly hear from others is that Ingemar is an insightful and knowledgeable trainer who is comprehensive yet engaging in his approach. Still unsure? Five minutes on the phone with Ingemar and you will be sold on how much value he can add to your business!"

Arj Arul - Director at Spires Legal

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