Making the Best of Bad Financial Results

Is there are way for making the best of bad financial results? I think there is. In fact, sometimes bad results can be the catalyst for major improvement.

When Bad is Good

First let me say I’m not really suggesting that bad results are good. No, the good I’m referring to has to do with actions that are prompted. For example, let’s say your company is profitable but always cash-strapped. Is this something you just have to live with or are there actions you can take? I’m relatively certain that frequently the causes of this are poor asset and liability management. Here are some questions to consider:

  1. Are you carrying more inventory than necessary?
  2. Are you collecting receivables in a timely manner?
  3. Related to number 2, are your credit policies appropriate?
  4. Have you used the correct financing for capital equipment?
  5. Are you managing accounts payable well?

I could go on, but the point I’m trying to make is that bad financial results have a cause or causes and you need to look deeper than just the results.

So, if these bad results prompt you to take corrective actions to right the ship, then they served a good purpose.

What About Your Company?

When you see poor financial results do you panic? Do you think there is nothing you can do? I encourage you to do neither. Instead, let bad financial results be a wakeup call and find out the root causes. Failing to do so only exacerbates the problems. Seize the opportunity to make improvements.

If you want to know more, contact AimCFO – Contact

As always, your comments are welcomed.

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