WHAT TYPE OF INVOICES DO YOUR SALESPEOPLE CAUSE TO BE RAISED?
There is one constant complaint by credit and accounts receivable staff which stands out. It is; they are unable to collect outstanding invoices in a timely manner because salespeople do not complete trading agreements or purchase order forms correctly. The likely outcome in these situations are invoices are raised which cause more problems than profits.
WHY DOES THIS OCCUR?
In my view the raising of problem invoices occurs for three main reasons.
1 Salespeople are pressured by management to sell "... AT ALL COSTS." Rarely however does management think through what these costs are and too often, incur costs they never even considered.
2 Salespeople are not EDUCATED about the benefits to THEMSELVES of how properly completed trading agreements or purchase order forms are in their own self interests.
3 Salespeople and customers are not encouraged to ask UPFRONT to challenge your business's standard terms and conditions and therefore create terms of trade which are mutually acceptable for both the customer and supplier.
At the end of the day, all trading arrangements are negotiable. If you negotiate upfront, both the customer and supplier win because there is no ambiguity on how the relationship operates. If you negotiate after the purchase is made and the product delivered, both parties lose.
WHAT ARE THE OUTCOMES OF THESE SITUATIONS?
TIME - Time is the biggest cost and as we know, time is money.
Poorly completed trading documentation or purchase orders, will lead to time lost to correct the incomplete documentation. Time is lost whilst details are completed, additional information sought and situations explained.
Time is therefore lost between expected payment and actual payment as result of non-compliance by the customer who has a different set of payment terms.
There is no cashflow because your business sold their product and sent their invoices to a fraudster.
SALES ARE LOST - In the effort to have the trading arrangement forms completed properly, sales are often lost as the customer asks: "Why wasn't I told about these Terms and Conditions previously", and decides to go somewhere else in fit of rage.
Sales are lost because the product cannot be supplied in a timely manner to meet the customer's genuine deadline (verses the artificial deadline designed to pressure you in to a bad decision).
Sales are lost because there is no time to rectify issues identified by a poorly completed trading or purchase order documentation before the customer takes their business elsewhere.
CASHFLOW IS DELAYED - The customer does not pay because they say "We were not aware of your payment terms, and besides, we did not agree to them".
Invoices and product are sent to incorrect addresses and to the wrong people. Therefore payment is delayed outside of payment terms, or is not received at all.
You have supplied a slow paying customer who uses deductions as a tactic to slow payments including advice supply issues within time deadlines specified in your terms of trade.
When your salespeople and credit / accounts people do not work together to ensure all trading agreements and purchase order forms are completed correctly, problems occur.
If you want raise profitable invoices which do not cause problems, encourage and "sell" the concept to your salespeople that your trading and purchase order documentation must be completed properly. When these forms are completed correctly, there is a greater chance of your invoices being paid without problems. Remove the problems, get paid quicker and both the business and the salesperson benefit.
May you be paid today rather than tomorrow