Sorry for stalling all. Last post regarding the big essay. A good example of the above is the following of what I have witnessed over the past several years. An $18 million business that I have been directly involved in has averaged settlements of $400k per year (equating to a rate of 2.2%). Increasing our payment terms deals from 30 days from end of month to 90 days from end of month meant that we kept our funds in the bank for another 60 days before having to pay for goods. This meant earning extra interest (even at todays rates, you can still earn well over 4% on large accounts. If you are paying out around $1.5million a month in suppliers and you negotiate an extra 60 days, in affect, you have just made another $50k minimum per year (again people, I am not doing exact mathamatics so as to keep it simple. Those of you that work it out for yourself will see the savings are actually quite higher). The you have the rebates. Both unqualified and with growth targets in a business around $18 million should bring home around the $800k mark (or 4.4% average).
Taking all of that into account, (again, I am not stating that Parra does not currently do this. They may, I just can't seem to find it), if you were to translate that into a Parra Leagues Club business worth around $60 million, the same numbers would come out around the following. Firstly if the Club bought $40 million in products and services, an extra 30 days in payment terms should net the club just over an additional $130k per year minimum. Secondly, if the right rebate structures were to be put into place (both unqualified and growth at 4.4%) an extra $1,760,000 would be made. Lastly if the settlement deals were all written up, an extra $880,000 would be saved.
The above example would mean,
1) Payment Terms : $130,000 minimum
2) Rebate Deals : $1,760,000
3) Settlements : $880,000
Total Savings in expense related areas = $2,770,000 without firing a single person may I add.