Transfer Pricing Can Improve Sales and Credit Cooperation

Article Abstract:

In organizations different departments are treated separately, quite often, and evaluated independently. The sales and credit departments are often at cross-purposes because of this. The objective of the sales department should be broader than increasing sales revenue and that of the credit department greater than just to minimize bad debt. The two managers need to cooperate to agree on a risk/return position. In the credit approval process, an individual's financial position is compared against a norm and can be evaluated on past performance if it will mean a good or bad account. There are some rated as one that will behave as the other. A risk factor needs to be determined that accounts for both lost orders bad credit. The expected expense can be compared to the expected value of the account when the customer falls into the gray area between acceptance or rejection. If the expected value of the sale exceeds the expected expense if it turns out the customer is a bad account, the sales manager could choose to accept the account and the risk. The sales department acquires credit from the credit department just as it would from another department. Hypothetically, each department could be evaluated as a profit center. Top management should be careful to evaluate and reward according to integrated goals to encourage interdepartmental communication.

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Positioning for the Upturn after Surviving the Downturn

Article Abstract:

Chapter 11 bankruptcy was the decision that management of A.L. Williams Company turned to after considering selling operations to larger customers, requesting time from creditors and selling off all operations and closing doors. Legal and accounting fees can be extremely high in surviving a bankruptcy. With Chapter 11, a major rule is the automatic stay where payment to creditors is ceased. Secured debt has priority for payment, priority claims are next, followed by unsecured debt. Some priority claims can be petitioned to receive super priority. Preferential treatment to creditors prevented, even prior to Chapter 11 filing. The company can void executory contracts. To turn the company around, slow progress needs to be made to streamline. Cost reduction was inspected down to small details, with each expense questioned. Management people need to be screened first, then production personnel to streamline for efficient management and operations. Cash management must be more carefully directed and controlled. Customers of A.C. Williams were wary of dealing with them after entering Chapter 11. New customer development can be the solution. Suppliers need to be evaluated for credit policy, quality, service and delivery time. Employee attitudes are crucial to success.

Case studies, Bankruptcy

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Logistics excellence

Article Abstract:

Corporate profitability can be improved by applying ten logistical principles to product flow and storage: (1) linking logistics to company strategy, (2) organizing corporate logistical functions within one business unit, (3) utilizing the power of information, (4) emphasizing enlightened personnel management techniques, (5) developing strategic alliances, (6) focusing on financial performance, (7) improving profitability by targeting optimum service levels, (8) paying attention to details, (9) leveraging logistics volumes, and (10) measuring and responding to performance. Specific benefits of conducting business activities in tandem with business objectives include quantitative improvements in: compound assets, compound equity, wealth creation, return to total capital, market share, economic value added, return on management investment, and return on sales.

Methods, Logistics, Business logistics, Materials management, Industrial engineering

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