Addressing Invoicing Problems

When customers take deductions, many credit department employees are frustrated because trying to figure out whether the customer was right or wrong was often a case of "He said --- She said." For example, some of your customers would claim:

• They never ordered the product

• The buyer did not instruct us to drop ship the product to an end user -- that coincidentally never paid them

• We charged a higher price than the price the buyer was quoted

• They were offered extended dating terms by the salesperson, but the invoice listed standard Net 30 day terms

• The PO number listed on our invoice was incorrect, and until it is corrected the invoice cannot be paid

• The person who placed the order with us did not have the authority to do so, and therefore the customer wants to return the product for a full refund

Part of the problem may be the practice of accepting verbal purchase orders. Without something in writing from the customer, it is impossible to know for certain if the customer's complaints were legitimate.  If you do not require POs on all orders, consider requiring hard copy purchase orders on every order over $5,000.  This way, you are likely to meet with limited resistance from your sales department and from customers.

Is there any magic to a $5,000 limit?  No. It seemed to be dollar figure large enough that you would not be bothering our customers placing small rush orders. Can an idea this simple work? I believe this tactic will reduce the number of disputes and deductions for every company that uses it.

Submitted by Michael C. Dennis