AR Period Reduction/Model

Investigating the behavior of several variables over time has probably raised more questions than answers. As such now it's time to investigate what else might be influencing the trending of these variables. There is a also a video for this insight which is a component of the Effective Problem Solving Course.

Investigating the behavior of several variables over time has probably raised more questions than answers. As such now it's time to investigate what else might be influencing the trending of these variables. There is a also a video for this insight which is a component of the Effective Problem Solving Course.
From the behavior patterns in the previous model the decline in [Avg Sales] while the [Avg Order Size] remains about the same with an increase in [Avg Order Period] should be an indicator that something is changing in the business, with the customers, or the environment. It's time to go talk to some people.
Since [Avg Sales] are down we started with the Sales department. They advised us that yes Sales were off as there was a current slump in the economy and customers simply weren't using the amount of product they had previously.
When asked about why the [Avg Order Size] remains about the same Sales indicated the [Customer] orders that much as that's where the discount point is. And since it takes the [Customer] longer to use what they ordered they don't order as often.
And when asked about the [Avg AR Period] Sales indicated that as it takes the [Customer] longer to sell what they ordered and to encourage them to order in the larger quantity we tell them they can delay payment.
So now we understand that Sales is encouraging the customer to purchase more so they can get the discount and delay payment. Sales and AR are operating in direct opposition to each other's goals. The've become accidental adversaries.
The question now is how to appropriately address the situation.

View the model in Insight Maker