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Sometimes even the smallest invoicing issue can cause a major delay in payment.
Consistent cash flow is essential for any business to succeed. This is especially important in the construction industry, since companies need to receive their payments on time in order to fund upcoming projects. Of course, get- ting all one's customers to pay their invoices on time is easier said than done.
The truth is that many companies meticulously manage and track their lead and sales interactions in order to earn new business, but they fail to implement such focus on their invoicing and collection processes. The result is a sometimes unorganized post-sale environment that both hurts cash flow and damages cus- tomer relationships. So how can these issues be resolved?
The best way is to simply understand your customers' problems. A recent TermSync study of business-to-business transactions sought to discover the most common issues that delay payments. After analyzing the results, the four discussed here were found as the top reasons.
Invalid or missing purchase orders
In total, 49 percent of late payments were attributed to a miscommunication regard- ing the purchase order (PO). Whether it is missing PO information on the invoice or the wrong PO number listed, cus- tomers will not pay until it is correct. This is a great example of how sometimes even the smallest invoicing issue can cause a major delay in payment.
It may seem easy enough for customers to contact their vendor to resolve the PO issue and send the payment, but unfor- tunately, it is a rare occurrence. More commonly, a customer looks at the bill, realizes the PO error, and since it can't be paid immediately, simply puts it to the side. More times than not, that bill will remain unpaid until the vendor calls about the late payment. The customer then uses that opportunity to discuss the PO error; an issue that could have been solved in a few days doesn't get worked out until sev- eral weeks or even months later.
This is an issue that vendors...