#1 Query Received by Credit Teams

#1 query received

In the Credit Management Benchmark assessment, we listed seven common queries received by credit/collections teams and asked participants to rank them in volume order, i.e. the most frequently received query first, followed by the next most most frequently received one, and so on through the list.

The number one query received, by a very significant margin is requests for copies of invoices. In the age of modern communications, how is this possible?

#1 Request Copies of Invoices

In debriefings with participants who had been through the benchmark process, we sought to establish the root causes of this being the most commonly received query. In many cases, participants suggested that it was merely a tactic to delay making payments, i.e. wait until an invoice is due for payment, contact the credit/collections team and say that the invoice was not received and ask for a copy to be sent out, thus buying more time to pay. However, this alone does not account for the significant volume of queries received looking for copies of invoices.

Snail Mail

When invoices are sent by post (mail), or snail mail as techies like to refer to it as, there is a 1 in 20 or even a 1 in 10 chance that the invoice sent through a postal service will not be delivered within the service level commitment provided by the postal operator.

Furthermore there is a percentage of the invoices that will not be delivered to their intended destination (we have all heard stories of envelopes being discovered in mail sorting offices years after they were supposed to have been delivered!).

However it is not just the postal service that can misplace paper invoices. Even when they are delivered successfully, the internal processes followed by customers can cause invoices to be lost.

Many years ago, there was a major US firm that took 45 days to process supplier invoices because of the number of times that paper had to be moved and processed. Each movement provides an opportunity for paper to be misplaced and although invoice registers are often used to keep track of invoices, customers may have to contact suppliers when the physical invoices are lost.

Surely Email Solves this Problem?

You would think so, but the experience of the participants in the Credit Management Benchmark is that although an improvement is seen compared to invoices sent by post, there is still a significant volume of requests for copies of invoices that have been sent to customers by email.

Why is this?

There are many reasons for the failure of email to be a successful delivery mechanism, but some of the common ones are:

  • The person that used to deal with invoices has left the company or changed role and the email address is no longer used.
  • Emails are being delivered successfully, but as the email address is not being monitored, nothing is happening with them.
  • Emails with invoices going into ‘Spam’ folders.
  • Customers not attending to emails containing invoices immediately and then finding it difficult to locate a specific invoice in all of their emails.
  • Accidentally marking emails as read even though they have not been processed.
  • Frequently, invoices received by email are printed and then processed manually – there is paper again! And all of the problems associated with handling paper invoices then come in to play.
  • Getting invoices approved when received by email may mean forwarding the email to someone else for approval and losing control of the process.
  • Some customers will refuse to process invoices sent to them by email because they may feel that invoice printing costs are being transferred to them OR they may have concerns about the security and integrity of invoice information.

Email can provide you with evidence that emails were sent – you can get date and time information for when emails were sent. Some email systems may even let you know that emails were opened but even so, the invoice attached may not have been accessed. Unfortunately you cannot guarantee that emails were delivered.

There is also an issue in that for security reasons, some email systems will prevent you from knowing that emails were opened and some go so far as to prevent you from finding out if emails were even delivered.

How can the volume of queries be reduced?

Looking at how some of our clients have seen reductions of over 60% in requests for copies of invoices, I have learned a number of things.

  1. Communicate effectively to customers to let them choose how they want to receive their invoices.
  2. Use a ‘Monitored Invoice Delivery’ service to deliver invoices electronically to customers. Not only does this track if emails were delivered, it also verifies that invoices were accessed.
  3. Provide an easily accessible portal where customers can view their invoices online. For businesses that are primarily focused on B2C (Business to Consumer) customers, providing access to invoices on your own portal works very well. However for B2B (Business to Business) customers or even B2G (Business to Government) customers, dragging them to your own website to retrieve invoices meets with resistance and low adoption rates. It is much better to provide data to a portal on which they can access invoices from multiple suppliers with a single login.
  4. Train the Customer Service and Credit Teams to direct customers to retrieve invoices themselves online whenever they receive a request for a copy of an invoice.
  5. Provide supporting documentation wherever possible. This can be delivery or service notes, contracts, or billing reports, but make sure that they are linked to invoices so customers can retrieve invoices themselves and can then drill down to see the supporting documentation. Invoices with correct supporting documentation are more likely to be paid than invoices without any supporting documentation.

Conclusion

50% of participants ranked requests for copies of invoices as the number one query that they receive from customers.

Yes, there are certainly situations where this is an excuse and a delaying tactic by customers, but there are also cases where invoices are genuinely not received for various reasons, or have been misplaced after being received.

If you can gather evidence that invoices were accessed by customers and make it easy for them to get access to their invoices online in a way that supports how they work, then you can see a significant reduction in queries for copy invoices.

How does your Credit Function compare?

If you would like to see how your credit function compares to your peers on this measurement and many others, why not participate in the Credit Management Benchmark?

The assessment phase takes only about 15 minutes to complete, and you will receive a comprehensive report, tailored to your responses within 3 business days.

Credit Management Benchmark

See how your credit/collections function compares to others using the Credit Management Benchmark across a variety of criteria.

Finbarr McCarthy

Finbarr has extensive international experience working with clients to improve their invoice handling processes. This applies to both inbound (invoices received from suppliers) and outbound (sending invoices to customers). Working with accounts receivable and accounts payable functions gives him a unique perspective because he can quickly assess the impacts of internal procedural or system changes on suppliers or customers, and how these changes will be perceived. His work has resulted in faster invoice throughput, lower costs and reductions in time taken to get invoices paid. More importantly, his work leads to better supplier-customer relationships with significant benefits for all parties.
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