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Have you ever bought an apology bouquet of red roses for your partner? A credit invoice is often perceived by your customers in a similar way: as a nice gesture, but it would have been even better if it hadn’t been necessary. That’s why it’s important to prevent crediting as much as possible. We’d like to share some tips with you.
Review the Credit Process
Some companies sporadically issue credits, while for others, it has become an accepted and structural part of their business processes. However, every company should be able to issue a credit invoice. After all, nobody is perfect, and mistakes happen. Nonetheless, it might be worthwhile to thoroughly examine the credit process within your organization.
Creating a credit is usually a time-consuming and costly operation that sometimes also nullifies valid revenue. Worse still, it may sacrifice future revenue for the sake of maintaining the customer relationship.
Save Costs for Your Company
Imagine: a customer calls because they disagree with one or more items on an invoice. At that moment, you compromise on customer satisfaction. The customer has to make an effort for something that’s not fundamentally their problem.
On the other hand, the cost counter starts ticking because handling customer contact requires resources. An employee or department must investigate the validity of the claim. If it’s valid, the corresponding invoice must be credited, a replacement invoice is necessary, in some cases, corrective action must be taken to prevent the issue from recurring on the next invoice. And to compensate the customer for the inconvenience, it’s not uncommon to offer an apology gesture in the form of waiving the invoice, a portion of it, or a discount on the next invoice.
Even with the prompt and accurate handling of a credit, the customer will still perceive this contact as a negative experience. After all, if the data on the initial invoice had been correct, the entire exercise wouldn’t have been necessary.
The above actions and processes can certainly be automated. However, it’s far better to prevent incorrect data on an invoice. By carefully examining the processes that precede the invoicing process, many corrective actions afterward can be avoided. This saves costs and increases customer satisfaction.
Customer Data Registration
Ask the right questions when a customer proceeds to purchase products and services. Ensure that when registering customer data, all information is recorded accurately and completely. This includes a good check of:
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- The correct name and address details of the individual or company. Consider that the Tax Authorities also have their invoice requirements;
- What is the VAT regime for the respective customer? Are they exempt from VAT, are they a customer abroad, etc.?
Registration of Price Agreements
Ensure a proper registration of the agreements made with the customer. Deviating prices or contract agreements are usually an effective mechanism for the sales department to seal a deal, but ensure that such agreements can be recorded well and unambiguously. This way, the agreement can be transparently translated into the correct price for a product and service on an invoice.
It might prove beneficial to critically examine what can be consistently recorded within your current system and which options you provide to your sales department. Perhaps the available options already provide enough flexibility to your sales department, and exotic price agreements can be avoided.
Invoice What’s Actually Delivered
Ensure a good alignment between what is actually delivered or being delivered and what is being invoiced. Consider only invoicing a product or service based on a positive signal from a system where the order processing has taken place. Also, when the delivery of a service changes or stops. A connection between such systems will significantly reduce the need for crediting.
If such a system already exists, it’s advisable to periodically conduct a thorough audit to see if the registration of the products and services to be invoiced is in line with the actual delivery of the products and services. When the invoice matches the products and services that have been delivered, customers usually settle it without fuss.
Erik Henselmans
FIQAS has been an authority in the field of invoicing processes since 1989, with renowned clients both domestically and internationally, operating from Aalsmeer.
