How Well Do You Know Your Financials?
(November 20, 2019)
- Mike Whitlock, a recognized leader in financial, marketing and strategic planning services, training and consulting, and president at Tannian Consulting, has spent the better part of the last two decades working with Association members on their operating ratios – especially as they compare to the crane, rigging and specialized transport industry overall.
“I’m looking for trends with regard to margins, what’s driving revenue, overall profitability, cash flow,” he indicated. “A good example would be AR [accounts receivable] days, collection cycle time, or job cycle time – that’s a key indicator of success. But that can also destroy a company, if AR gets so far out, and a company can’t operate with cash. So I’m looking at financing trends as well. What are we seeing in this regard to the amounts that are being financed, the terms that are being offered by banks and lending institutions? I’m really trying to get a sense for where the industry is moving based on the financial trends that we’re seeing from the most recent history.”
The most common mistakes Whitlock comes across with industry companies he works with? “Not managing gross profit margin [GPM] – just sort of letting it happen as opposed to driving it,” he pointed out. “Letting overhead expenses get out of control is another. And not managing equipment utilization as well. Also, not managing AR close enough. Again, just sort of letting these things happen versus driving it.”