Penetrating Portals for Payments

Time was when the only problems collecting from financially strong customers were nuisance claims, disputes, and the terms some of them would muscle into your transactions. Now, with outsourcing of payables, you're apt to find your customer has no idea of what's going on or is interested in dealing with discrepancies. Add in business internationalization, where your customer's decisions are being made by management in distant countries, and you're approaching what this credit management veteran is facing every day.

Prices for the brazing and soldering materials sold by Fusion, Inc. change constantly with the metals market, and invoice prices on customer orders are determined on the day of shipment. That makes invoicing and collecting increasingly complicated, particularly in these days of internationalized business and company ownership. And it is being complicated further as more companies shift to purchasing and payables portals.

In a typical case right now, a Fusion customer in Mexico has to get approval for a price increase from Poland. “There are all of these countries in Europe we have to deal with, and the problem is that the companies seldom identify the people we need to talk to,” explains Credit Manager Charmaine Lester. “It makes it very difficult. You get an email back saying: we're working on it, we'll let you know.”

On Hold

“Our only recourse is to put orders on hold,” she continues. “Sometimes the only way to make them understand when they pass that email on to the people in Europe is that if they're not going to get our product, their production could get shut down. They have to give us an answer.”

The problem is so serious and comes up so frequently, that except for a select few, terms for all customers outside of the U.S., are always on payment in advance or credit cards. This customer in Mexico happens to be in the automotive industry and knew that new pricing went into effect on July 1st. 

“We ship them out every Thursday,” she says. “I just got a call from customer service. ‘Do you think we'll get the new pricing?'” “No,” she told them. “What we'll probably end up doing is invoicing in our system at the new price. I'll have to issue a manual invoice for the difference because they're only going to pay what the last quarter's pricing was.” 

“That creates a lot of extra work on my end,” she notes. “But you have to do what you have to do, to get it done--collecting the balance, keeping after them to let them know that, after a certain period of time, we won't be shipping.”

Salespeople's Role

Salespeople are expected to get ahold of their contacts because those contacts can put a lot of pressure on Purchasing. “We have to have this,” we tell them. “' You must get back to these people to get this done.' We're working from both angles—Credit and Sales.”

She flags a lot of customers “hold check with accounting”, forcing Sales to call her and verify that an order can ship at the time it is placed rather than later. If there is an issue with the customer's account Sales can let the purchasing person know that a resolution is needed before shipment.

Every day, Credit does invoices in their own system. Then, a lot of customers are required to invoice in their portals. They have to set everything up, get everything going, and then turn around and plug the same information into their systems.

“It's gotten to the point where we have had many customers tell us that we have to do this, and, if we don't, we'll be charged for sending them paper invoices,” she says.

“We download our invoice into the portal so they can see it. But they never get an actual piece of paper in their hands. If everything goes smoothly, that's fine, but when there's a hiccup it's a mess to try to straighten out.”

A hiccup would be where they don't have the right pricing in the portal. Then she has to go back to the buyers and tell them that they need to get the pricing changed. “That will allow me to put in pricing that is lower than what they have in their system,” she says.

Kicking the Price Up

“They know that the price can go up or down, so we try to tell the customer that if they kicked the price up a little, we would not have an issue. But if the price winds up being higher than what they have in their system there will be delays.”

Another hiccup would be a freight charge issue. Normally they ship collect. But in one case she is handling right now the customer wanted to prepay. 

She did that but then found she could not enter the finished price into the portal because there is no line item for the freight. “So we're working with them to try to get that resolved,” she says.

“We try to get all customers to send in purchase orders. The majority do, but we still have some that call in orders. So we have to go back to the buyer--whoever's name is on the PO. But it takes time, and sometimes you can't get that invoice into the portal for two or three weeks.”

Meanwhile, time goes by, and the invoice will be past due. “It's past due, but it isn't past due because I haven't been able to get it into the portal.”

With one customer, invoiced for 12 ounces of material, when they went into their portal, they found that, while we had it invoiced per ounce, it was listed per 10 ounces. They also had the price wrong in the system. 

“We had to go back to the buyer and have her change that price after figuring out what it should be. Then we had to make the change in the system and on the PO. She emailed me back and then I was able to get into the portal and enter it. That took two weeks.”

Not as Bad as the Mail

The mail system has been so bad, however, that she often does not mind going into a portal. “It's just that, while a customer in the U.S. is easier to deal with if we have to go to another source outside of the country to try and get things done that's where we run into a lot of issues and a lot of time spent trying to get things corrected.” 

There isn't much Credit can do except have salespeople make whoever is calling in the order understand that prices do fluctuate: “Here's the price now, but it's going to change.”

“A lot of customers are requesting emails of invoices now rather than mailing,” she says. “I'm fine with that because it gives me documentation of the date and time it was sent. We were having an issue where customers were demanding proof of delivery. So we started automatically emailing the tracking slip with the invoice. Some had not wanted to look for them. Now that excuse has been taken away. They have a tracking number so they can find out for themselves.”

Customer Service faces the same issues as Credit. They have to go into several portals every day to see if there is a PO out there. With companies outsourcing their payables and their purchasing by doing everything online in the portals, they are having suppliers do all of the work. And, of course, all portals are different, there are so many different software systems.

“The big thing is our communications with the customer,” she sums up. “You just hope you get a buyer who is on the ball and who will respond to your emails. Many just ignore them. You send emails three or four times before you get a response—not a payment, but an email back saying that they're working on it.”

Contact Information:

Phone: 440-602-5563

Email: clester@fusion-inc.com

LinkedIn: https://www.linkedin.com/in/charmaine-lester-ab7a47126/