By Ing. Sandra Felsenstein

On many occasions, although a good volume of sales is made, the results reflected are not satisfactory. It is important to stop then and analyze some possible reasons that may generate, or at least contribute to this situation. Although a high level of billing may be generated, both the high direct costs and general expenses directly affect the profitability of the business. In these cases, take into account:

  • Varied range of items or business units that generate different results in the company. In some cases, several product lines or differentiated business units are managed, which in turn have different scales of profitability and generate different results in the company. It is extremely important to understand and consider this point when designing a trading strategy. The objectives should be set in relation to the different possible levels of performance, what the business leverages and what it does not, etc., with the premise that “selling more is not always selling better.”
  • Financial difficulties. Many times good sales are generated with good results, but with poor cash flows. This situation can be generated, for example, by very long collection periods and too short payment periods. This translates into little “cash at the end of the month.” The months with higher turnover imply higher variable costs, generating positive results from a commercial point of view, but with possible negative cash results. This type of mismatch can be increased in inflationary periods.
  • High inventories. There must be a “logical” relationship between the immobilized stock and its rotation, to avoid unnecessary losses. For example, despite a good sale, if the stock is high, the asset is not liquid and consequently the results are not appreciated. In some industries the damage can be even greater, if, for example, merchandise remains in stock for too long and then becomes obsolete or goes out of fashion and consequently its commercial value decreases. Consumer products with expiration dates deserve special attention and control, to avoid having to eliminate them and generate a total loss.

It is essential to consider all these points when designing the most appropriate commercial strategy possible, setting objectives based on the most profitable products or lines of items. Once clear goals have been established, it is extremely important to implement good commercial control panels (TACOs) and use all the necessary tools to detect deviations and act quickly accordingly.

Subsequently, and based on a good analysis of the available information, commercial actions can be implemented that allow the business to be further leveraged.