Disruption Thinking: Reduce Accounts Receivable 10% or Make $800,000?

Decisions made at the executive level often affect the whole business in some way, and will likely cost substantial portions of the budget. Capital is precious and requires management and administration with the utmost care. As a result, lack of direction and/or optimization can lead to setbacks where there need not be any. To free up cash and optimize your working capital takes some forethought, but sometimes, all you need is to stop looking at passive objectives, and create something which really grabs people’s attention.

Is a 10% reduction on your Accounts Receivable enough. No, of course not. Instead, you want to make $800,000 three times as fast! This article will take you through some key ideas in disruption thinking, with links to (Lean) Six Sigma, and leadership.

Disruption Thinking and (Lean) Six Sigma

Much like Kaizen, (Lean) Six Sigma can be understood according to the following tenets:

• Know the value stream. By knowing the customer, you can identify issues early on that may affect success. By deconstructing processes to understand how they work you can decide to improve them.

• Eliminate and prevent waste. Waste causes your business to stagnate, and can ultimately lead to failure, so eliminate it where you see it. Even more effective, don’t let it accumulate in the first place, and it won’t be a problem.

• Systematic improvement. Six Sigma takes time, using accurate data, to achieve the best results, and should be used according to a systematic plan with clear goals in mind.

• Team work. Six Sigma is nothing without team work, so make sure everyone pitches in, to ensure the success of the project. Strong leadership is important to making Six Sigma and Lean process work.

With these key principles, you can become a Six Sigma pro in no time at all. But while it may seem beneficial to focus your energies on reducing your Accounts Receivable, disruption thinking is proving in many circles to be far more effective when it comes to generating revenue.

Disruption Actions

Here are some disruptive actions to help you take advantage of the market and your own business’s potential for improvement:

• Customizing your Six Sigma and continuous improvement. (Lean) Six Sigma and Kaizen are flexible methodologies, and can be manipulated to best suit the needs of your business. If your production environment doesn’t require quite the same rigorous action Kaizen offers, then slow things down to your pace. Use Six Sigma where you can to customize your improvement strategy. After all, one size doesn’t necessarily fit all.

• Does a process need to be improved, or can it be disrupted? Where most businesses will tend to stick to the standard process outline, you can do what they can’t. Disrupt the flow, break down processes and rework them from the ground up. Use Six Sigma to determine what works and what doesn’t, then make a change for the better.

• Access your deep capital. Considering the ever-soaring costs of new capital, it’s important that you not let your business waste what it already has. Often enough, we find that significant quantities of cash are trapped on many business’s balance sheets, without them even knowing about it! Use Six Sigma techniques to identify and access this extra revenue, to enrich your budget. You’ll have an added edge over your competitors, with a new stream of funds to invest, for which you are certain to see great returns!