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About the Author
The President of ChannelCorp, Bruce Stuart is a Certified Management
Consultant with experience in the computer hardware, software and telecommunications
markets of more than 40 countries. He has authored in excess of 300
articles and eight books on the subjects of building channel partner
business value and improving vendor channel strategy. He is a world
renowned executive educator and strategic management consultant.
ChannelCorp Workshops
ChannelCorp provides Executive Education to vendor and channel partner
management. Public workshops take place in Asia, North America and Europe.
In-house workshops take place throughout the world. For more information,
go to the Workshops section of www.ChannelCorp.com.
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1.4 Invoicing Solutions
The previous article focused on shipping solutions to receivables
problems. The article focused on three rules of thumb:
avoid problem customers (or make them pay)
do not ship without Purchase Orders or Purchase Order numbers
do not ship without including an invoice for the goods
This article focuses on invoicing solutions to receivables problems.
By focusing on the rules of thumb presented below, reseller management
can begin to regain control of expanding investments in receivables.
The seven rules are:
send invoices with shipments
make sure all invoices are perfect
cross reference invoices with all Purchase Order numbers
specify a payment date instead of quoting standard terms
add an incentive for early payment and/or a penalty for late payment
add a message that a reminder call will be made one week prior
to the payment date
strive to understand the Accounts Payable system of your clients
Invoice travels with product shipment
Do not allow product to leave your premises without an invoice. Deliver
invoices for services rendered immediately or the next day. Do not hesitate
to use a courier to speed a large invoice to its destination. Do not
hesitate to fax or e-mail an invoice to get the payment process rolling.
Follow the faxed or e-mailed invoice up with an original.
Make sure all invoices are perfect
There is no excuse for invoices not to be perfect. Company names, contact
persons, product/service descriptions, purchase order numbers, contract
numbers, amount owing calculations must be perfect. If they are not
perfect, there is a good chance that payment will be slowed. Blame yourself
for slow payment if the invoice was incorrect.
Cross-reference everything
It is critical that there be no reason that your invoice can be held
up by a clerk seeking clarification or more data. Make sure that all
Purchase Order numbers are referenced on the invoice. Provide copies
of the Purchase Order, the proposal document, or quotation, and the
signed confirmation letter from the client. Confirmation letters from
clients are important documents when a complex set of deliverables are
being delivered and invoiced over an extended period of time. Use them
and include them with invoice documentation.
Specify a payment date
Have you ever wondered what terms the credit card companies give you
on your credit card purchases? Would you be surprised to learn that
the terms are getting shorter and shorter? Next time you pay a credit
card or utility bill, calculate the terms. To do so, you will need to
know the Billing Date and the Payment Date. You have been trained to
focus on Payment Dates and not terms. You can train your customers in
the same way.
If you send invoices with shipments, then your Shipping Date and Billing
Date will coincide. If you wish to be paid within 21 days of shipment,
and the product was shipped May 1, then your invoice would read “Invoice
Payable On Or Before May 21/0X - Expect Reminder Call On Or Before May
14/0X” . Your system will meet some resistance in the beginning
but it will send a clear message to your customers and assist them with
their cash flow planning.
Add an incentive or a penalty
Approximately one in three (35%) resellers provide some sort of financial
incentive for on-time payment of invoices. Approximately half (45%)
of resellers tell clients that they have late payment penalties. There
is nothing lost by including the option to add interest to accounts
that are not paid on or before the specified Payment Date. Add the Penalty
Notice to the bottom of your invoice. At worst, the penalty note will
help a receivables clerk make a decision to avoid the penalty and pay
your bill first.
Add a call back message
Not all invoices that are sent are actually received. It should be mandatory
that your people confirm that an invoice has arrived at its intended
target. Big ones should be couriered or hand delivered by the salesperson.
Equally important is the requirement for your receivables people to
know if a payment is going to be held up. Get into the habit of calling
your accounts one week before the Payment Date to make sure that everything
is on target for timely payment. It may be ready early, you might be
able to pick up the cheque or you might want to have the cheque couriered
rather than mailed.
Understand your clients’ accounts payable systems
It is very often possible to speed the payment of an invoice by taking
on part of your client’s administrative roles. Do certain people
within your client’s organization have to receive copies of invoices?
Could you relay them? Do special forms have to be submitted to obtain
payment? Could you fill them out? Find out how you can make the payment
of your invoices painless and brainless. Get to know your client’s
Accounts Payable system as well as they do.
Details matter in The Accounts Receivable Project. Focus on perfection
in your invoicing operation and begin to put downward pressure on your
receivables investment immediately. The next article focuses on billing
solutions to cash flow problems.
The foregoing document has been excerpted from the 6th Edition of the
Reseller Management Handbook,
available for $100.00 U.S. from ChannelCorp Management Consultants Inc.
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Download this article as a PDF file
ChannelCorp Consulting services
ChannelCorp provides strategic consulting in the areas of channel economics,
channel strategy, channel marketing, channel development and channel
management to hardware, software and peripherals vendors around the
world. ChannelCorp is also widely recognized as one of the industry’s
leading authorities in the areas of reseller and solution provider profitability
improvement.
ChannelCorps’s management consulting expertise
is built on a solid foundation of fifteen years of researching and analyzing
the evolving business models and marketing strategies of the vendor
and solution providers worldwide.
Suggested Reading
For more information on the topics covered in this article, you should
consider purchasing The Channels Handbook and/or The Reseller
Management Handbook. For more information, go to the Products
section of www.ChannelCorp.com.
Availability
ChannelCorp can make our copyrighted materials available to your organization
for inclusion in your corporate newsletters and websites.
For information on republication, contact Bruce Stuart
- channelcorp@telus.net
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