Seemed like we had a better grasp on our materials and charges to customers when we were smaller. Our goal is to bill out all materials, equipment, parts used for a client, even if those materials are ordered at the last minute and picked up from a local supply house. What suggestions do you have for getting more control without getting too complicated?
Keeping track of what”™s happening in the field can be a challenge. Build a system of information at the point of purchase. Teach your people about the importance of keeping track and getting paid for what”™s used. Reconcile all charges to make sure nothing”™s missing. Keep the door open with customers to come back after the fact with updates.
It”™s often a better choice to have field people pick up last-minute needs at a local supply house. The alternative is to drive all the way back to the office, wasting precious time. The challenge is making sure that what”™s charged gets reported to HQ immediately.
Look at the geography your people cover. Set up territories. Negotiate with a supply house that is central to each territory. Set up a charge account or charge card to be used for all purchases.
Set up a purchase order system to preapprove purchases. Have your field people call in for a purchase order number and authorization to charge, or have them carry carbon copy purchase orders in their trucks. When the purchase order is issued, have the field people note which customer the purchase is for. If there are several purchases for several customers, consider separate orders for each. That will help keep things organized if materials are returned later on for one customer or another.
Ask the supply house to bill you weekly instead of monthly and insist that they be up-to-date with their submissions. Object strenuously if they suddenly try to bill you for something purchased two or three months earlier. Reconcile the bills within a week of receipt to ensure everything you”™ve been charged for goes into the accounting system right away.
Alternately, consider hand-held equipment for all your field personnel. As they make purchases in the field they can record the purchase on the device, making notes on which customer is to be billed. This information then uploads into your accounting system automatically.
You can also set up a charge card system for people in the field with a master billing account and separate card numbers for each person. Download billing detail weekly. If there are any questions, you”™ll have the date of purchase and the name of the card holder. Usually it”™s pretty simple to look up which customer received service on that date, once you know who made the charge.
Either way, the goal is to train your people to keep track of what they”™re doing. Point out that wasted money eats into what you have available to pay salaries and bonuses. If someone makes a charge and a customer isn”™t invoiced, that”™s a double hit ”“ you have to pay for it and you don”™t get any money coming in to cover the cost.
Once bills come in, research unexpected items to find out if they were installed at a customer site, left on a truck, brought back to be put into inventory or returned to the supply house for a refund. If people know your accounting staff is checking up, there will be less temptation to be sloppy or to lose track of items. Potential for theft goes out the window. And profits go up.
Make sure customers understand you have a longer billing cycle tied to last-minute changes. Close out customer invoices, including additional charges, within a month of doing the work. These steps will help to cut down on questions after the fact, as you”™ll be discussing something that happened no more than a month earlier, rather than trying to figure out something from three or four months ago.
Looking for a good book? Try “Inventory Best Practices” by Steven M. Bragg.
Andi Gray is president of Strategy Leaders Inc., www.StrategyLeaders.com, a business consulting firm that specializes in helping entrepreneurial firms grow. She can be reached by phone at 877-238-3535. Do you have a question for Andi? Please send it to her, via e-mail at AskAndi@StrategyLeaders.com or by mail to Andi Gray, Strategy Leaders Inc., 5 Crossways, Chappaqua, NY 10514. Visit www.AskAndi.com for an entire library of Ask Andi articles.
