MANAGEMENT APPROACH

Review payment trends of selected accounts and analyze reasons for changes.

Set reasonable sales goals based on existing customer base and new customer potential. Review profitability by customer based upon products sold.

Caution! Grant special terms if margin is high enough to cover carrying cost or if vendor terms offset. Keep abreast of changing customer financial position. Visit customers periodically and observe activity.

Operating Strategy

If external factors (i.e. weather) causing slowness, monitor carefully: If other factors seem present - contact accounts for explanation.

Keep customers within prudently established credit limits - Do not oversell customers ability to pay. ll customer buys low margin items and pays beyond terms, influence customer to buy other products carrying higher margin. Calculate affect on profit on each situation considered.

Be prepared to adjust credit limit and respond to unusually large orders based on knowledge of customer operation.

o Lagging collection effort o Fear of shutting off

Gross Margin

o Margin declining o What is mark-up required

. Product sales mix a Expense control o Accounts payable

Examine methods in use, change style and type of effort. Don't hesitate to use personal type letters.

Establish credit cut-off policy and enforce!

Set margin objective based upon R.O.l. goals.

Establish R.O.l. goal and determine mark-up required for achievement.

Achieve proper mix to get R.O.l objective by sales emphasis, advertising and merchandising.

Justify on payback basis all controllable expense additions.

Pay vendors within discount period if discount rate justifies. Il not, pay on net terms.

So you think you are running your business! You should be! But, your suppliers, customers, employees, accountant and banker are all part of the variable relationships that must be dealt with and you determine the outcome. Whether the business problem is one of cash flow or low return on investment, you can usually trace the source to lack of balance sheet management.

In summary, let me leave you with this basic overvlew:

Cash flow and return on investment are a function of to whom you sell what you sell

If you watch to whom you . . .get sufficient price gross margin sell, you will to make a satisfactorv

Change approach occasionally to avoid the "familiarity syndrome." Inform owner when his effort is required.

Treat customers the same under cut-off policy. Provide for continued cash purchases with override to clear old balance.

Monitor all major product sales monthly. Make sure prices are being increased to olfset cost increases and maintain margin.

Analyze mark-up on products and determine if grouping (i.e.. hardware) is on target.

Monitor sales and if mix changes, act immediately to stabilize so low margin products won't become primary sales. Look for cost reduction, efficiency improvement. Do not add cost unless other options aren't available. Watch vendor terms. Negotiate special terms if possible. In inventory increase periods, time deliveries to maximize cash and extend payment time.

Collect Your Accounts Receivable Achieve Your Sales And Profit Goals

If you watch what you sell, you will provide proper service and substantially control out-of-stock problems

. . keep your investment in inventory low and at a practical level increase your inventory turnover.

Those two rather simple statements, watching to whom you sell and watching what you sell, can make the profitable difference in your business.

So, you think you are running your business! You will be if practical controls are in use and sufficient information is available to plan for future periods and monitor performance against planned objectives.

Please Specify:

DEALERS SET FOR 198Os

(Continued from page l6)

Clure reviewed the government's u'reseurce crisis," and urged the lumber and building material dealers to monitor closely what the federal government does as their involvement is needed to protect their interests. "Your business future is at stake," he warned, "as we face a federal Land Resource Policy which appears to be leading to a crisis in raw materials." The senator was the keynote speaker at the October 7-l l, convention.

Deregulation in the transporttion field was discussed by a panel led off by Edward J. Schack of the Interstate Commerce Commission who reviewed pending deregulation legislation and forecast eventual passage of some form of the three bills pending next year. He said it could also lead to a major change in the ICC role in government and American transportation.

Joseph C. Kaspar, of the California Trucking Association, said that costs would"not change much," if deregulation comes. He said there was no widespread support for deregulation and that organized

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P. O. Box 7ff Cloverdale, Ca.95425

(707) 894-3997 AIIIN

REC|!R0 tUillBER of golfers took part in the San Joaquin Valley Hoo-Hoo Club 32nd annual Valley Frolic and joined in the festivities at the San Joaquin Country Club, Fresno, Ca. Gordon Knott lll congratulates new president Terry Huntsman; l2l Jim Jones, snark of the universe, and Bernie Barber Jr., show display of Hoo-Hoo Club ties from the Melbourne, Australia, club; l3l Bill 0berholser, Jim Froggat, Tom Martin,

Dale Winslow; l{l Jack Couch, Don Johnson, John Weaver, Bob Schlotthauer: l5l Bob Fargo, Frank Montevecchi, Dick Kennedy, Jim Meadows and Lyle 0lson. 0ther new officers are Bernie Barber, Jr., sec.-treas.; Chuck Will, northern v.p.; Bill Oberholser, southern v.p.; Craig Galfney, sgt. at arms; Bob Bretz, Jerry Decou, lll, Don Johnson, and Wally Kennedy, directors; Gordon Knott, vicegerent snark.

Twoox Traders

International Div. P. O. Box 4868 Arcrta, Ca.95521

(707) 822-46r'

KEI\I L\TJDENSCHII\GEN

DAVID FONIS

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