As collectors, we always strive to get all of the invoices paid in full. But, in the manufacturing business where you send pallets or shipments out on a daily basis, you are bound to have discrepancies. These discrepancies include shortages, damages, mis-shipments, or lost products. How does an A/R collector deal with the response, “We reported the problem on time and since it’s short, we’re not paying for any part of it until the whole order is shipped in full and is complete. The customer insists that even though the Proof of Delivery was signed, they only signed it to receive the pallet of goods but that it’s still subject to an official count.”
Since I’m stuck in the middle because our company doesn’t want to issue a credit and the customer refuses to pay, what are my options?
Signed: Broken Pallet
Dear Broken Pallet,
Thanks so much for your email and sorry that you’re having this problem. The “count” excuse is one that is often difficult to surmount but one reader’s company who had the same problem initiated a procedure, Help Us to Help You, to try and resolve shortages, damages, etc. after they have received the pallet(s) of goods.
After the goods are delivered and at the time they are to be counted and confirmed, the customer shows the count being performed through FaceTime or another tele-video application or platform. In this way, together, the supplier and customer can confirm if there is a problem. This protects all parties involved and makes the resolution of any shortages or damages much quicker. This procedure was implemented with all new customers and gradually many existing customers have also come on board. The bottom line is that this procedure has reduced the number of unresolved shortages, damages, complaints, and ultimately delayed payments.
For the current non-payment problems you have, there should always be a paper or digital trail of a particular complaint showing all the details of the discrepancy. If the complaint is legitimate, then you need to respond to it asap. At the same time, please impress upon the customer that payment for all acceptable goods still needs to be paid for. This is something that I would recommend you include in your contracts and purchase orders.
If someone says they only called and talked with someone at your company, then you may have to get that individual involved to verify the complaint. If nothing can be verified, then please do your best to obtain partial payments for whatever the amount of the goods is not shorted or damaged. As there are many dynamics involved in each customer relationship, sometimes you can really push hard for payment on goods that are accepted, while other times you have to tread gently and follow their requests to resolve the problem before payment can be made.
I’m not sure of your ability to go up the chain at your customer’s location to speak with a person of authority about getting payment, but that is also an option for you. Finally, depending on the competition and the ability of your customer to go elsewhere for the product, if putting them on a credit and ship hold can provide viable payment leverage for you, then you may have to do that.
Hope the above is helpful. Please let me know what happens.
Dear Crabby is a credit, collection, and human resources advice column by Nancy Seiverd President CMI Credit Mediators Inc. Your thoughts and comments (email@example.com) are most welcome!
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