|Have you ever calculated your costs for resolving receivable disputes? If you have, you’ve probably discovered that the process is quite expensive. Here’s why.
A misstep in any department involved in a sale can result in a discrepancy that delays payment and drives up costs. Disputes, discrepancies and exceptions are “nonstandard” transactions that require additional handling. Costs escalate as customer service or the collection department works to discover the cause and resolve the issue.
The cost of determining where the mistake was made is typically more substantial than most companies realize. Labor is an obvious cost – but it involves more than the hours spent by the collection team trying to unravel the problem. Also to be considered is the time spent by various other personnel called upon to help piece together what happened.
Then, there is the often overlooked cost of delay in receiving payment. The longer resolution is delayed, the less likely it will be resolved and the greater the impact on the company’s bottom line.
What can be done to decrease the likelihood of disputes and the financial losses involved?
In addition to alerting you to any potential problems, these customer service contacts also serve to remind the buyer of his obligation. And, if there are no complaints, don’t hesitate to ask when payment can be expected.
Controlling the costs of a dispute
Should a dispute occur despite the efforts above:
Each day a dispute remains unresolved, your profits on the transaction continue to evaporate.
Touching your customers before the invoice is due and working with all departments involved to ensure the order-to-cash process is consistent, efficient and accurate should result in fewer payment disputes and discrepancies. And, in turn, improved profits.