One thing I just don’t get is how Credit Notes are accepted as a part of doing business. In some larger companies they even have “Dispute Resolution Departments” to deal with the queries and disputes. In other Companies more and more time is spent on this activity. When you think about it – this is a job that could be avoided and the time spent on this activity could be better spent on more profitable endeavors. In a recent survey in the weekly “Credit Coach” EZine, 30% of respondents said that they spent most of their time dealing with queries and disputes.
Now for some hard questions:
1. If we say customers are important – why is it acceptable to send them incorrect invoices?
2. If we care about our customers have we ever considered the additional work we have caused them in having to check our invoices and raise queries?
3. Did you know that following research in the US – up to 25% of the cost of doing business is down to having to redo stuff after it was done incorrectly the first time?
4. If a percentage of the products we supplied were faulty, would we be happy. I don’t think so! Why is it ok for a percentage of our invoices to be wrong?
5. If we tell a customer we will supply goods at one price and charge them a higher price, some may think we are either incompetent or dishonest – is this what we want our customers to think about us?
6. I know I got rid of a supplier because I was sick and tired of having to check every line on their invoice because of constant mistakes on their part. Could this have happened to you?
7. If you have a pile of unresolved queries on your desk:
a. Will some result in credit notes? If the answer is yes;
b. Are your sales figures accurate?
c. Are your profit figures accurate?
8. If the Credit Notes relate to short deliveries or damaged goods could this be impacting on the accuracy of the stock levels and valuation?
Credit Notes undermine your whole business. Delays in issuing credit notes undermines your business completely. If you know something has gone wrong the only way you can save face is by rectifying the problem quickly and checking back with the customer they are happy. Anything less should be totally unacceptable to you.
Finally and in some cases one of the more serious side effects of sending out wrong invoices is that we are handing our customers a readymade excuse for not paying us. The longer we take to resolve the problem the happier our customer is because they get to hold on to our money.
Focus over the next few weeks on eliminating Credit Notes completely from your business. You will do that by taking the time to analyze every Credit Note you issue in the coming weeks: what went wrong?
Was it a person?
Was it a system issue?
Was it a procedural issue?
Was it a communications problem?
What steps need to be taken to make sure this problem never happens again?
As soon as you have cracked this problem all the other issues become easier.