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Are You Ready to Automate?

(August/September 2018) posted on Thu Sep 27, 2018

A major capital investment may seem like a no-brainer, but it will change your organization in ways you need to consider before signing the purchase order.

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By Mark A. Coudray

Since I was the only one selling, it meant I was either on the phone setting appointments or out of the office making calls and taking orders. During this time, my two employees had nothing to do but reclaim screens, clean the shop, and do some minor prep and maintenance. It was certainly not enough to keep them busy. My labor costs stayed the same, but we weren’t billing to offset them. 

I began to see I had a problem, but it was nothing like the bigger storm on the horizon, a critical mistake that almost put us out of business. I was out of cash. My accounts receivable (AR) had ballooned to over $30,000. Previously, it had been running around $4000. 

My policy had been 50 percent down with the order, with the balance paid on delivery. It had been a manageable plan. As soon as I got paid, I’d order the stock for the next few jobs. 

Automation changed all that. We were printing orders so fast that things began to slip through the cracks. Customers would pick up jobs and not pay. My guy at the end of the dryer would slip up and let the goods go out the door. Jobs would get printed and sit for two days to a week or more. In the meantime, we kept printing, because we could. Making it worse, we started to make printing mistakes that became very expensive.

It didn’t take long before all the available cash had been converted to AR, and I was at a standstill. We were out of cash and out of work. I couldn’t make payroll. I couldn’t pay my bills. I couldn’t pay myself. It was a classic example of insolvency. We had been busy up to the moment we ran out of cash.

Fortunately, I had a couple of mentors who helped me through, but at a heavy price. One of them co-signed a new working capital loan equal to what I had borrowed for the press. My loan payments were now roughly $1500 per month plus the premium I had to pay for him to co-sign. I won’t go into the details on that, but it ended up costing another $900 per month until I could get him off the note. 


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