Credit Matters Blog

How To Raise An Invoice And Lose The Customer

Kim Radok 19 August 2012


We live in a business world today which seems to place an over-emphasis on the process of selling and raising invoices. It is often thought, these objectives are the only keys to business success, and yes, selling and raising invoices are essential objectives in any business. However, too much of an emphasis on these objectives to the exclusion of operating in a balanced manner, can also lose you customers.


Losing customers occurs for two main reasons. First, the organisational ethos is to milk the customer at every opportunity without thinking of the customer's business needs. Secondly, you will usually find there is little thought on whether  invoices are raised correctly or there are adequate customer service resources.

Typically this type of businesses will proudly articulate their "sales and marketing" ethos as the main reason for the existence of their business. However, despite articulating this "sales and marketing" ethos, they rarely seem to measure or gauge whether their customers are truly satisfied.

Consequently on reviewing the operations of this type of  business, you will usually find there is a correlating lack of emphasis on:

(i)   raising invoices correctly;

(ii)   customer service;

(iii)  business process review;

(iv)  minimising the numbers and dollar values of customer credit claims;

(v)   providing appropriate resources and respect to account receivable employees and operations;

(vi) failing to respect and maintain business disciplines, e.g. when management continually over-rides stop supply or slow payment actions;

(vii) understanding the value of organisational self-esteem in a marketplace dominated by other competitors and grasping customers.

Therefore in these businesses you will find management's focus is on getting ever more sales. One of the advantages of rising sales is that bad managers can hide their other operational mistakes. Of course when sales fall, we soon see the error of their ways.

In the meantime, with the emphasis on sales, business managers can forget about the needs of their customer. As a result, these managers think there is no negative effect when they endorse the raising of incorrect and invalid invoices.  However, the wise business manager knows, this is far from the truth.

Every business has a proportion of customers which hate inefficiencies and errors. It is these customers which end up moving to another supplier because of the increased costs caused by your mistakes. Whether they subsequently pay your invoices or not, is immaterial in the long-term. You still have a lost a customer, or at least, a portion of their business.

Another way to lose a customer is due to lack or resources to make professional  follow up contacts for the unpaid invoice(s). Due to a lack of resources, follow up contacts are often not made in a timely manner. Therefore by the time the contact is made, you will find the authorising person is no longer with the customer, the invoice was never received or the customer has gone out of business etc.

Finally, you can lose the customer and keep selling into your own business's insolvency with a "sales at all cost" business ethos.  What I mean with this comment is that you keep selling and sending invoices to the wrong customer which has little intention or ability to pay you. Make enough sales to the wrong type of customer, and your business will soon become insolvent.

Concentrating on sales and raising invoices, are essential objectives for any business. However, forgetting to manage the other aspects of doing business properly, and raising invoices incorrectly, is another way of losing customers.

May you get paid today rather than tomorrow 

 Kim Radok