Have you ever bought a bouquet of red roses to make up with your partner? A credit note is often similarly perceived by your customers: a nice gesture, but it would have been even nicer if it had not been necessary. That is why it is important to prevent credit invoices as much as possible. We give you some tips.

Time to inspect the credit process

Some companies credit sporadically, while for other companies it has even become an accepted and structural part of the business. But every company must be able to make credit invoices. Nobody is perfect, after all, and where people work, eggs are broken. However, it may be worthwhile to have a closer look at the credit process within your organization.

The making of a credit invoice is usually a time-consuming and costly operation which sometimes even costs valid turnover. Or worse, future revenue is given away for the sake of the customer relationship.

Saving costs for your company

Suppose a customer calls because they do not agree with one or more items on an invoice. At that time customer satisfaction is at risk. The customer must, after all, make an effort for something which is basically not their problem.

On the other hand, the cost counter starts running because a customer contact must be handled. An employee or department needs to sort out the appropriateness of the notification. If the complaint is correct, the original invoice must be credited, a credit bill must be issued, and in some cases corrective action must be taken to ensure the problem does not occur again on the next invoice. And to compensate the customer for the trouble it is not unusual that a courtesy bouquet is given in the form of the cancellation of the bill, a part thereof or a discount on the next bill.

Even when a credit is processed fast and accurately customers will experience this contact time as a negative thing. Because if the information had been correct on the initial bill the whole exercise would not be necessary.

The above actions and processes can of course be automated. But it’s much better to prevent erroneous data on an invoice. By carefully (re)defining the processes that precede the billing process, many corrective actions afterwards may be prevented. This saves costs and will increase customer satisfaction.

Credit note customer satisfaction

Registration of customer data

Ask the right questions when a customer is about to buy products and services. Make sure that the customer data registration process enforces correct and complete recording of data. Carefully check/verify (for example);

  • The correct name and address of the person or company. Keep in mind that the tax office also has its invoice requirements;
  • What is the tax regime for the client? Is it vat exempt, is it a customer abroad, etc.

Registration of price arrangements

Ensure proper registration of the agreements made with the customer. Special prices or contract agreements are usually a strong mechanism for the sales department to attract a customer, but make sure that such arrangements are registered properly and unequivocally. This way, the arrangement can be translated transparently to the right prices for products and services on the invoice.

It could be a useful exercise to take a critical look at your current system; what kind of information can be recorded unambiguously, and what are the tools and options your sales department have when hitting the road. Perhaps the available options already provide sufficient flexibility to your sales department, enabling them to prevent exotic price arrangements altogether.

Bill what is actually delivered

Ensure proper connection between what is actually delivered and what is being billed. Think of billing a product or service only when a positive signal is received from the order processing system when the order entry is completed, but also when service or product delivery is changed or cancelled. A link between these systems will significantly reduce the need for credit invoices.

When such a system already exists, the motto is to conduct a proper audit periodically to see if the registration of billing products and services is in line with the actual delivery of goods and services. If the invoice corresponds with the products and services that have been actually delivered, the customer will usually foot the bill without complaints.

Erik Henselmans

FIQAS is an authority on invoicing processes, established in 1989, with renowned international customers and operating from Aalsmeer (greater Amsterdam area).

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