Let me start with a story: This story is about JFK’s visit to the Apollo mission control centre in the spring of 1963. The visit was designed as a morale booster to all who were working to deliver the dream, Kennedy told the world about a couple of years before.
During his tour he travelled down one particular corridor, now whether Kennedy and his entourage got the wrong corridor or the janitor did, doesn’t matter, greeting the group was the sight of a 6’ 10” Janitor with a mop and bucket cleaning the floor and blocking the way. The janitor froze. Kennedy walked up to the man shook his hand and asked “So, what do you do here?” The janitor replied “Sir, I’m putting a man on the moon.”
The message from this story is clear to me, everybody who worked in that organization was there for one reason and one reason only and that was to put a man on the moon. Everyone had their own specific roles but the overall objective was clear. From the director to the janitor everybody knew their job was contributing to putting a man on the moon.
Now see if you can match the simplicity of that story to your business. If I asked everyone in your Company what were they doing there, do you think I would get a number of different answers? If you are there to collect all the cash and the guy in the office next door is there to bring in orders, and the guy on the other side is looking to cut as many costs as possible and the guy across the hall is looking to go the extra mile in customer service, can you see the conflict that is generating. Then if we measure each person’s performance against a different set of criteria we are reinforcing the conflict.
The job of Senior Management is to define for all of us what “the man on the moon” is for our business and why it is so important for us to achieve it, and the standards that have to be met along the way. We all should know we are making a valuable contribution and the business is heading in the direction we all want it to go.
Now, if the purpose of the business is to make money and we count the money only once and that is when it is put in the bank. Then the Credit function becomes the lead role in the business. The credit guys are the ones scoring the goals by lodging the money generated by the efforts of all the others.
If you measured your success in terms of cash rather than using accounting complete with accruals, prepayments and extraordinary items, to make sure you can arrive at whatever profit figure you are asked to get, you would have a clearer picture of the business.
If you resolved to pay all your bills on the date they are due and gauge your success by the cash balance, wherever you decide to hold it. If everyone was working to make sure every customer was happy with everything, thus removing the excuses for non payment, if the credit manager steered the sales and marketing teams towards the profitable and desirable customers, and worked to devise a business strategy for the higher risk ones to ensure a higher return for all. If proper risk assessment was done at the start to make sure the customer is good for the amount of credit they are looking for. If everyone was committed to the profitable growth of the business, would things be better?
It can be done; the question is do you see why this could be a better way? Are you prepared to make the necessary changes? Let me know if you would like more details on this business model.