Book Review - "The Best Kept Profit Secret" Book

Aug. 4, 2009 - PRLog -- The Best Kept Profit Secret Book - The Executive's Guide to Transforming a Cost Center Into a Profit Center
Authors: Flood, Jerralds, Perez, Sanchez, Tyburski

The “Best Kept Profit Secret” refers to the Credit Department. With the publication of this book it is no longer a secret. Read this book and you will start thinking Profit. It is a small book, 150 pages, containing numerous mental time bombs that will challenge conventional thinking on credit management. I can visualise some conservative credit people reading this book with their hair standing on end.

The current world economic credit crisis has, at least, allowed us the opportunity to question and reassess Credit from all its angles. Indeed, as credit professionals we have a unique contribution to offer. We have struggled over many years to get Credit on the agenda; we now have a stage. Imaginative ideas and solutions are needed.

This book sets out on this road. The book has five authors (“three Americans, a Mexican and an Irishman”). The editor is Simon Groves of Atradius. In his introduction the editor describes the authors as a formidable team… “between them they’ve created an invaluable business bible that is … authoritative, intellectually stimulating and very accessible.”

The authors, as introduced by the editor, are our own Declan Flood “who challenges conventional wisdom whenever it raises its pompous head”, Abe WalkingBear Sanchez (who is well known to a lot of IICM members) Luis Eduardo Perez, Davy Tyburski and Greg Jerralds. The authors make up the Profit InnerCircle, LLC.

Dolly Parton

Dolly Parton is not generally associated with credit books but she is acknowledged with a quote in the introduction “If you don’t like the road you’re walking start paving another one”.
The book comprises six headings called “The Six Organisational Ps. These are Purpose, Policies, Process, People Requirements, Process Monitoring and Performance Measurements and Passion.

A chapter is devoted to each heading. In chapter one, Abe WalkingBear gives the genesis of the Organisational Ps. He starts the chapter by stating that studies have found that on average 25 %of the total cost of doing business is due to inefficiencies… Whatever about the actual percentage I agree with the statement.

Lack of communication, poor coordination, duplication, concentration on narrow tactics and excluding strategic goals and no feel/instinct/understanding of CASH and CREDIT are major causes, in my experience, for business inefficiencies.

Profit Centre

Abe states that businesses need a change in mindset and should see that Accounts Receivable, often seen as a chore, a cost, is … a Profit Centre waiting to happen. As a Profit Centre it can contribute to increased sales, improved cash flow etc. However, management needs to accept when and how change is necessary. Abe states that a business manager not focused on improvement becomes an administrator at best and a bureaucrat at worst.

He states that we should move away from the old DSOs and % bad debt and develop a more positive approach with credit as a Profit Centre.

In the chapter on Purpose, by Luis Eduardo Perez Mata, the reader is taken through a few basic questions. With skilful reasoning it is shown that The Profit Centre is primarily a Sales Function … to increase profitable sales by the credit channel … to identify improvements …to generate greater value … reducing operative costs.

Policies and Processes

Abe WalkingBear write a chapter each on Policies and Processes. These are, also, very well structured and take the reader through the basics of the Profit Centre. He develops the concept of Product Value and margins which are critical areas in a viable Profit Centre.
The chapter on People by Davy Tyburski is very interesting, amusing and thought provoking. Credit people must be communicators and be sales focused.

Declan Flood enlightens the reader on Process Monitoring and Performance Measurements. In a blunt and well written chapter he cogently advances the ideas and thinking behind Credit as Profit Centre. There is an interesting cartoon in this chapter under the caption “BUSINESS IS BOOMING”. The cartoon is a presentation showing four graphs all going down- DSOs, % Overdue, Bad Debts Provision and Bad Debts.
Declan argues that not only is this a negative method but that general credit terminology (e.g. Stop List, Credit Limit) is also negative.

Welcome to the 21st Century

Declan brings the reader through some of the alternative methods of reporting, measurement and interaction with the rest of the company. Throughout, the underlying concept of credit as a Profit Centre is clearly kept in focus.

The 6th P – Passion.  This chapter, by Greg Jerralds.

Greg starts by stating that Passion is the difference between an efficient organisation and one that is truly inspired… it is the foundation that supports the other…organisational Ps.
Management leadership, communications, internal collaboration and an organisational passion for employees and customers is very well covered.

Thought Provoking

The last few pages provide the authors’ biographies and some background notes on Profit InnerCircle, LLC., including information on B2B Profit Blueprint ™.
I liked reviewing this book. It is original, thought provoking, writing with passion and conviction by all the authors and will, no doubt, be a catalyst for good in the Credit field.

It will definitely encourage discussion.

Published by Profit InnerCircle, LLC
ISBN 978-0-9816557-2-7
Copyright 2009 by Profit InnerCircle, LLC

Order your copy today online at:  
https://pic.infusionsoft.com/cart/store.jsp?view=4&i=p51&...

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