Maximise Your Margins: Small Changes, Big Cashflow Impact

Your gross profit margin is what remains from your total sales after deducting variable costs. Understanding and optimizing this metric is key to strengthening your cash flow and building a more resilient business.

A Simple Example

Imagine you’re a retailer:

  • Sales for a given period: $1,000,000
  • Cost of goods sold: $650,000
  • Gross profit margin: 35% ($350,000)

If you improve your margin from 35% to 39%, your gross profit increases to $390,000—an extra $40,000. Even if this requires a slight increase in overheads, the boost to your cash flow can make it a worthwhile investment.

Strategies to Lift Your Margins

The right strategies depend on your industry.

For Retailers:

  • Reduce stock shrinkage and theft.
  • Avoid unnecessary discounting.
  • Minimize obsolete stock to free up working capital.

For Contractors:

  • Address rework and material wastage.
  • Ensure all work and materials are billed correctly.
  • Boost team productivity to maximize efficiency.

Let’s Improve Your Margins Together

We can help identify the best strategies for your business and run your figures through our Cashflow & Profit Improvement Calculator to show the impact of seemingly small changes.

Don’t let poor margins drain your cash flow and working capital. Contact us to create a plan that works—and puts more cash in your bank account.

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