Another unbalanced balance sheet

[Neil Williams]

On Tuesday 25 January 2005 10:03 pm, Robert Locke wrote:
> But my customers are not individuals, they are businesses themselves.

Fine, send them a statement at the end of a particular billing cycle. I 
invoice daily, they pay weekly and I send statements monthly if it's late or 
if there are any discrepancies.

I order twice a day, they invoice me every order, the girls check off every 
order, I send stuff back every day, they credit me every time the goods are 
received back, end of the month I get a statement and pay a single bill of 
£50,000 or so. Why on earth would I want to pay twice daily invoices and 
incur 50 bank charges a month!! These are not small bills here! We're talking 
of one of 800 shops doing a total of $250,000 each month, including maybe 20 
credit notes per shop per month.

It's a chore going through the statement but there are people paid to do that.

Other bills get invoiced monthly, paid three months in arrears and get tallied 
when payment arrives. This only works because that client does not accept 
returns or refunds or any deviation. (If you hadn't guessed, that client is 
the government - their rules).

> The question really amounts to whether you expect payment against an
> invoice or payment against statements.

These are not mutually exclusive. If someone hasn't paid an invoice, you send 
them a statement so that they can see what has been paid and what has not.

Any business that works on invoices will do the same if you only ask.

A statement doesn't have to be anything more than a print out of the register 
for that customer.

> For my business customers I send an invoice for services provided
> related to a particular task.

So do I. But when there is a dispute, I send them a statement and they match 
it with their records.

Invoices are fine if they are always paid in full.

The moment some payments are paid in part or refunds are arranged, goods not 
delivered, credit notes required, all that stuff, a statement is useful.

> Different tasks are owned by different 
> departments within that business. 

Then organise your customer details to account for that and send each one 
their own customer report (statement). It's not hard.

> Therefore payment approval actually 
> goes through different channels even though the "Customer Name A/P
> Department" is who I am billing.  So it is not at all unusual for me to
> get paid "out-of-sequence" and for me to track it down, I need to pester
> different individuals within that one business.

So they need a statement, not a reminder of a single invoice. They need to be 
able to reconcile their accounts as well. It helps them to have a list of 
invoices paid as well as outstanding.

> Large businesses do not generally pay against a statement.

Pardon??? What do you call 800 shops averaging £4,000 in orders every day?? a 
hobby?

> They pay 
> against an invoice.

No, they pay £50,000 a month, per shop, on a statement sent to each individual 
shop that includes credit notes.

> What if the "open invoice" is ancient?

It's never ancient because you allocate payments to the oldest invoice first 
(which is where this whole thing started) - all you'll have is an opening 
balance / balance brought forward. You can just take the report back further 
in the date options. It's only a few pages.

> I need to help them reconcile. 
> I worked in an accounting department at one point and this sort of
> "reconciliation" is a royal pain.  Much simpler if when they pay by
> invoice I can note it as such, and simply pester them about the unpaid
> invoice....

If you've got credits and incomplete payments, it's easier with a statement.

>
> Also, each invoice is many times related to it's own individual Purchase
> Order on their system.  They cannot pay by statement since it would not
> be correctly applied to the correct PO....

Then put the PO reference in the Post Description box and it'll show up on the 
statement. Duh!

> The moral of this story: None of my customers will work by statement...

Of course they will, a statement is just a list of invoices and credits.

-- 

Neil Williams
=============
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