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Transcript
I became a director of a company many years ago that had a month end invoice routine. It was that way because there were so many invoices to produce that batching on one day became the norm and it was done by one of the directors who was time poor.
It may have solved a workload problem but it created another one in terms of cashflow.
It also highlighted poor delegation but that is a whole other discussion.
Because the invoices were sent on the 30th of each month and customers had 30 day credit terms, you couldn’t start chasing for 30 days to get the money in. So if a customer had been serviced or received goods at the beginning of the month, they were effectively getting 60 days credit.
And that is assuming they were good payers. If you have dealings with credit sales, you will know that slow payment is a definite cash policy in some organisations and others will only pay on receipt of a statement.
Not to mention we were paying out for stock in the meantime that we had not yet received the money for.
So one of the first things I did was change invoicing to weekly, the only reason it wasn’t daily was due to lack of resources and inadequate software which was sorted out over time. But what we saw was a more regular flow of money coming in and a more logical, simple way of actually doing the invoicing so that practically any member of staff could do it if required.
In fact I hired a fellow bookkeeper to come in and do it part time to make sure it got done and that lovely lady still does work for me today in my business.
That’s it for this instalment.
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