· Give your customer an excuse not to pay
· Tell your customer this is not really very important to you
· Increase the workload of your Credit Controllers
· Increase the workload of your customers Accounts Payable Team
· Increase the volume of paperwork (Invoices, credit notes, amended invoices etc)
· Increasing your own cost of doing business.
And if that is not bad enough, as long as you have unresolved queries lying around, the sales figure you are reporting in incorrect, the profit figure you are reporting is incorrect – and in my experience overstated. It is seldom a customer lodges a complaint that they have been undercharged for an item!
It is seldom they contact you to say “you only billed us for 10 and you really delivered 11” - I don’t think that ever happened in my career! So you run the risk of further erosion of your margin through stock losses every time you complete a stock take.
I firmly believe that the functions of Credit Control and Stock Control should be closely linked in every business that is supplying goods. If your stock figure is right for every single item then you can be fairly sure your invoicing is also correct. If not then you could have a real problem that needs to be addressed.
If your system tells you that you should have 10 items in stock and you go out and count 8. Either:
· Customers received two they weren’t charged for
· The wrong item was shipped (the fact you haven’t heard from your customer could mean it is more valuable than the one they should have received!)
· Your supplier billed you for goods they didn’t deliver, and you didn’t notice
· Someone took the stock
Whatever the truth of the matter any one of these situations is not good, and if you allow it to go unchecked indefinitely – it will keep getting worse. Your business depends on proper controls.
To rectify the situation you should perform a completeness check at each stage in the process:
1. What the customer ordered V’s the order we keyed on to the system
2. The order that was keyed on to the system V’s the picking lists that were created
3. The picking lists V’s what was picked
4. The delivery dockets V’s the orders loaded
5. The quantities on the delivery dockets V’s what was delivered
6. The quantity that was signed for
7. The quantities that were invoiced.
In an ideal world these should be the same – we all know we don’t live or work in an ideal world. If getting it right is important, you should have a system in place that tracks the movement of stock at all times otherwise there can only be one loser, and that is YOU.
Look at how you are currently managing the process. Document the process flow, Learn where the gaps are and then do something to fill the gaps. The sooner you do the sooner you will increase your margins.
Every Credit Note should be investigated and understood and a process put in place to make sure that particular set of circumstances will be dealt with correctly from now on.