We all love cash, right? You can’t run a business without cash, so how well do we manage cash in our dealerships?

How to manage cashflow is one of the four decisions that every business must get correct to be successful (along with people, strategy and execution). Think of your financial results in this way: Revenue is vanity, profit is sanity, but cash is king. Without cash, dealerships will starve.

How can you increase cashflow without outside financing? To find the answer, let’s discuss the concept called the cash conversion cycle, which is the length of time, measured in days, it takes from when you spend a dollar to when it makes its way back into your pocket.

There are four components of the cash conversion cycle: sales, inventory, delivery and billing.

Shorten the Sales Cycle

Your sales cycle is how long it takes a client to say “yes” from when they first express interest. The sales process is the biggest influence on the speed of a sale. The process should define questions salespeople should ask; offer suggestions to gain commitments; list how to’s for building relationships; and include instructions for completing the work order.

Here are some additional ideas:

• Offer ongoing sales training and “onboarding training” for new salespeople

• Create a clear follow-up and communication process that salespeople must follow

• Provide value up front so the prospect clearly sees the benefit

• Add online ordering for ease of purchasing parts, attachments and even larger equipment

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