Hitting the Books --Dickeson

Maybe I've just been too hard on those printers with an average of 50 days outstanding receivables by saying they were buying sales by extending credit. It's possible I just don't understand the problem. Okay. Let's get back to some basics.

1. Study

2. Plan

3. Execute

4. Test

Then we'll start the cycle over. We'll study again, plan again, execute again, test once more and keep doing that until we accomplish our objective.

What's our objective, you say? Thirty-five days? Forty days? Make it something reasonable and achievable. Remember there's always a little hooker in the path—getting the invoice out promptly! Never forget that when you're counting days or hours. Achieve the objective and you can always set another.

Get Executives Involved

Who's to be in the group doing the studying and planning? Here's my suggestion: CEO, CFO, Sales chief and CSR chief.

What's the subject of the study? The invoice itself. Get a bunch of 'em. Look at 'em. I mean really look hard, like you were the customer. Are they clear? Simple? Concise? Remember this little document is the Mother of all Business Documents for the print company. This ain't no finger-pointing, blame game; it's a how-do-we-get-better effort—how do we achieve the objective?

I look at the invoices I get from our local hospital. Ye Gods! It's no wonder our medical profession is in such a mess. Prompt? Like two months? Simple? Like you tell me what some of those things mean. I'm just a simple businessman-lawyer-accountant-writer trying to figure out the new prescription drug provisions, let alone that hospital invoice. So what do your invoices look like? What should they look like? Study them. What can you—what should you—eliminate?

Is it clear just when the invoice should issue? Does the Sales Agreement say so? What must the invoice contain? What about shipping? Is the invoice to include shipping costs or are these to be paid by the customer direct to the shipper? Postage? Is it the obligation of the customer to have the proper postal deposits made? What happens if the customer hasn't made the required deposits?

What about cartons or special packaging? Who pays for them? Is it to be on the invoice? Or separately invoiced?

And what about all those customer change orders—the debits and credits that occur during the course of production? Summarize or detail? My personal rule, in this electronic age, is that every customer change must be documented by an e-mail that sets out the change, who ordered it, when, and the adjusting debit or credit in dollars. Want detail? Send the file of e-mails. What? No e-mails on file? Then, no credit or debit! Simple. Got a better method? Let's hear it.

Counts? Overs and unders? To me that's a relic of a by-gone day. Scrap it. It's just an excuse for delaying the invoice. You can't possibly make up the few bucks you might gain or lose while delaying your invoice awaiting someone's guess of final count.

Does the invoice state explicitly when it's due? Thirty days means from the date the invoice issues. Give the customer a break. Compute it for them. Tell your computer to add 30 days to its issue date and print it in bold face right next to the bold face total due.

E-Mail Saves Time

Again, this is the age of electronics. Issue the invoice by e-mail. Make sure you know the proper e-mail address of the party to whom it should be sent. This also gives you a good excuse for a phone call asking, "Is a mailed hard copy necessary?" If not, "Is everything in good order, clear and understandable?" E-mail starts the collection period 48 hours or 56 hours earlier than snail-mail. We're gonna make that objective!

Wait a damned minute. What about that quick-pay discount? Are you still allowing that discount? If you are, I want you to make that the subject of some of your study. Is it really working like it's supposed to or is it just complicating the amount due on the invoice? Theoretically, the customer is supposed to get a discount of 1 percent or 2 percent if he pays the invoice in full within 10 days. But how many of them ever do? How many customers take that discount long after the 10 days have expired? My strong suggestion is that you look hard at this feature and probably scrap it in order to clean up the invoice and get rid of a sore point.

So, you've still got customers who don't believe you mean 30 days when you say 30 days. They think you talk the talk, but don't walk the walk. Well...you've got a collection problem, haven't you? That's different than a dirty invoice or a late invoice. Now we've got a clean, neat, timely invoice after all of our studying, planning, executing and testing, but a laggardly customer.

I've written about some collection techniques before. Remember? Oh, you've forgotten or lost that article? The dog ate it? Whatever. Tell you what, I've saved a copy and I'll be pleased to send you another as a freebie if you'll drop me an e-mail. But there's a condition.

You've got to promise me you'll study, plan, execute and test your invoices to get them clean, sparkling, and on-time. Promise you're going to get the gang together and set an objective that you're going to meet and keep, and I'll gladly send the article. Hell, I'll even send it if you fib about doing that. After all, it's your business, not mine!

—Roger V. Dickeson

About the Author

Roger Dickeson is a printing consultant located in Pasadena, CA. He can be reached at rogervd@sbcglobal.net. A PDF copy of his recent book, Monday Morning Manager, is available without charge by e-mail request.