AUTHOR: Leigh Risbey
Reviewing the rhythm of your business is like listening to the heartbeat of a person. If you can hear a regular and consistent beat, then the heart is working to a rhythm. It doesn’t mean that it is efficient and effective, but it is rhythmic at least. Wiring the person to a heart monitor, taking other ‘vitals’ and analysing a blood sample will give you a fuller picture the efficiency and effectiveness.
Now let’s relate this to business and ask ourselves some questions just on one topic area: invoicing and payment (debtors):
- How frequently do we send invoices to our customers?
- How frequently do the invoices we send get paid?
- When am I alerted to non-payment?
- Do I have to ask to find out the answer?
- Am I given the information without prompting from me?
- What was the trigger for the information being provided to me?
- What level of time delay can the business sustain between invoice and payment (cash cycle – covered in another article)
When we have the answers to these questions and few more, we can determine if the process, its trigger points, the escalation process and overall performance of the process is delivering a result we are happy with.
For instance, let’s assume we invoice all customers on the first working day of each month for completed deliveries.
The number of customers and value of invoices issued is presented to you, in report form, by the end of that working day.
Your payment terms are 7 days.
Day 8, you receive a report detailing the customers that have not paid or who have part paid.
Your accounts department has a standing instruction to follow up all unpaid or partly paid accounts with either a phone call or an email on day 8 of the month.
Day 15, you receive an update report of non-payments and part payments.
Your accounts department has a standing order to now phone all outstanding accounts and seek understanding of the delay.
Day 17, you receive a report of the outcomes of these calls and the intended actions to recover the monies.
End of month – you receive a report of the outstanding accounts and actions to date – you can now intervene only in the ones you need to, and you have been aware of developments throughout the month.
Benefits:
- You know what’s going on without having to prompt someone to do something and you don’t have to go digging for the information.
- Your time is spent on the things that matter and relate to your core skills.
- Your customer know that they cannot put your invoices to the bottom of their ‘to do’ or ‘to pay’ pile.
- Your staff know what they need to do and by when and with what level of authority.
- You can intervene at any time in the process if your cash cycle is at risk.
- If you do not receive a report, you will notice it by virtue of a break in the rhythm and you can ask why.
When this is applied to the key and critical processes of the business— financial, productivity, inventory management or other—you subconsciously start to expect things to turn up in your reports or your dashboard. If they don’t, it is noticeable and you can manage by exception rather than trying to manage everything at every stage.
Starting is the key to any process of change. Simply taking one key and critical process and mapping it out step-by-step will clarify what you can expect to happen in a set timeframe.
This is often called milestone reporting or periodic reporting. Whatever term fits your business language is fine; you and your people need to establish regular tasks and their timings, with an alert triggered if something does not happen.
Another rhythmic cycle is often the meeting calendar. Setting regular meetings with your teams to review standing items on an agreed and effective agenda is another effective way to know what is happening and allow others to get on with doing what you hired them to do.
For example, a daily operational meeting or toolbox meeting can take a little at 5 to 15 minutes. In this time the team can discuss yesterday’s performance, any reason for underperformance to plan and corrective actions taken, followed by discussing the target/plans for the day ahead. This can save hours of time seeking information from multiple sources.
Caution: These meetings have to be well-structured and disciplined. Each person needs to know what they need to bring, when they need to talk and what other contribution is expected.
We can talk more about meetings, frequency, agendas and outcomes and help you structure this into the rhythm you need for your business.
Additionally, we can support you in identifying the critical processes that need rhythmic regularity to allow you to do what you’re best at!
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