Like most creditors, we have our fair share of deduction problems.
Many of them frustrated us because trying to figure out whether the
customer was right or wrong was often a case of "He said --- She
said." For example, some of our customers would claim:
They never ordered the product
The buyer did not instruct us to drop ship the product to an end
user -- that coincidentally never paid them
We charged a higher price than the price the buyer was quoted
They were offered extended dating terms by the salesperson, but
the invoice listed standard Net 30 day terms
The PO number listed on our invoice was incorrect, and until it
is corrected the invoice cannot be paid
The person who placed the order with us did not have the authority
to do so, and therefore the customer wants to return the product
for a full refund
It became clear to us that all of the problems listed above occurred
because we were accepting verbal purchase orders. Without something
in writing from the customer, it was impossible to know for certain
if the customer's complaints were legitimate. We decided to require
hard copy purchase orders on every order over $5,000. We met with limited
resistance from our sales department and from customers. When customers
did call, we explained that a purchase order protected them and us...
and that if we accepted their PO without protest, even if we found
a problem later we would honor the PO terms.
Is there any magic to a $5,000 limit? No. It seemed to be dollar figure
large enough that we would not be bothering our customers placing small
rush orders. Do we review the purchase orders we receive? Yes. Do we
find lots of problems? Not any more, but we did at first. There were
errors involving price, quantity, terms of sale, and product warranties among
many others. Now our customers are accustomed to being asked to generate
purchase orders, and understand that each PO is checked in detail the
problems we used to have are now rare.
Can an idea this simple work? I believe this tactic will reduce the
number of disputes and deductions for every company that uses it.