Lightening the Burden of Proof (of Delivery)
Is there a finance director that doesn’t want to speed up cash flow and get customers to pay earlier? I don’t think so. After all, the incentives for doing so are clear. A 2006 survey of 250 UK quoted companies revealed they were sitting on a total of £40bn overdue debt.
The worrying aspect is, more than half of this debt is overdue because of customers’ disputed accounts (£12bn) or unresolved queries (£9.7bn). The problem for many companies is that debt collection is inextricably tied to customer service – delivery of goods and products.
Which is why the accounts receivable (A/R) function within companies is getting increasing focus. Just as in accounts payable, A/R can derive tremendous benefits from document imaging and management processes, providing a rapid and ongoing return on investment (ROI).
This is especially true for companies in the retail, distribution and manufacturing sectors. Here, a single type of document is the major trigger for credit disputes: the proof of delivery (PoD) note. PoDs with missing signatures, or delivered late from a depot, or PoDs that cannot be matched with the appropriate invoice are the bane of many a credit manager’s life. It is a small document with a huge impact on overall credit control.
So how do companies address the issues of automating, tracking and matching PoDs? The answer is to apply proven document processing techniques from accounts payable, to the accounts receivable function, to assist in indexing the documents.
For example, by harnessing the optical character recognition (OCR) facilities in popular document scanning engines, PoD documents can be automatically index-printed with appropriate information. This makes subsequent access and document retrieval easier once the PoDs are received back from the customer and scanned into the PoD storage repository.
Indexing documents early means that PoD notes can be located and retrieved by almost any search criterion including delivery date, customer purchase order (PO) number, customer name, invoice number, consignment note number or transport contractor. In some cases, this can be done as a bar code at the time of printing, which makes later tracking and matching far easier.
Where customers make claims for non-delivery or incorrect delivery of goods, the PoD document storage system gives authorised staff immediate access to a searchable repository of images of completed, signed PoD document images, with links to original orders and consignment documentation. PoDs can then be speedily retrieved and, when necessary, automatically e-mailed (as scanned images) directly to the customer, as valid evidence of the delivery having been made – putting the demand for payment beyond question.
For companies with high volumes of PoDs and larger customers, secure extranet access to the PoD storage system can be enabled. This lets customers and partners log in and view the PoDs relating to their transactions without having to go via either the credit control team or logistics.
Delivery fleets can even be equipped with mobile document scanning capability, enabling secure upload to the PoD storage system immediately following a delivery. This on-the-spot scanning builds closer links between the delivery contractor and customer, and enables missing PoDs to be spotted immediately as they become rare exceptions.
Deploying a PoD solution need not have significant extra cost implications on top of existing document processing investments. An example is a major UK plastics manufacturer that has introduced imaging and document management to cover signed PoD notes. The model here is that the company pays only for the annual support on the software, and not for user licenses – enabling cost-effective rollout across the company and a fast ROI.
Extending document management and imaging processes to this single document type – the PoD note – can make a big impact on the efficiency and traceability of customer A/R transactions.
While this relatively modest step in automation may seem to be a low-level administrative function, it can play a vital role in keeping bad debt under control, and in quickly resolving account queries. Reducing debtor days and boosting the perception of customer service are achievements that are very welcome in any boardroom.