Benchmarking Pay

Benchmarking glow Products and Chemicals Lawrence Sports has had a difficult time of keeping exchange flow where they urgency and need it, in order to arrest a better interest rate. Cash flow from customers, accounts receivable play an enormous role in this equation and go times may be tight sometimes for customers and gross revenue muckle will always request extra foothold for a struggling customer, setting a minimum allowance term schedule is essential to maintaining the financial health of your witness company. Benchmarking Air Products and Chemicals showed the importance of just a few long time make of is accounts receivable average, tightening of its address terms and works its accounts receivable down by eight days. In the final dope of two hundred4 the average days to payment was around 69 days. This was from the invoice date to the actual receipt of cash into their accounts. This was evenhandedly consistent with other industrial gas suppliers, Air Products felt they could do better in order to bear on their bottom line even more. To improve this they started to employ channelize debit of invoices, put a tighter noose of extending credit and sticking with standard terms or encouraging companies to take value of small discounts for early payment.

Moving forward to the second quarter of 2007, the company had reduced the average days to payment for the 69 to 61 days. While this in itself does not sound the like it would impact the bottom line here are a few numbers to consider. For every single day of improvement the company increased their cash flow by $25 MILLION dollars, therefore freeing up an astounding $200 plus million dollars of working capital, just by having people concentrate on accounts receivable. Looking deeper into the over all benefit of the company this change yielded an improvement in the OROI of between .25-.50% or approximately 2-4% improved profit. These numbers were also achieved as the credit was getting tightened in the US economy and had no adverse... If you want to get a full essay, order it on our website: Ordercustompaper.com

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