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Our credit dept. continues to send out A/R statements despite the fact that most customers pay online or by credit card at time of order. Has anyone seen recent statistics that would support my recommendation to eliminate this costly, non-value added, effort? The management team has debated and without evidence they are unwilling to change.
Thanks in advance.
Anonymous
Response:
You say that most customers pay at time of order, which means that most statements show a zero balance. I would not send out zero balance statements.
Our experience is that each customer has its own payment processing characteristics. Similarly, your billing patterns may vary by customer as well. You might be making many small shipments to one customer and they might appreciate having a statement to pay from, especially if the customer has centralized Payables but disbursed receiving. Billing for services can be different than billing for product. Some such customers we worked with even paid the statement first and matched invoices later. In essence, our policy was to send statements to customers for whom that helped us get paid faster, which was about 20% of our customers -- some of these were very large customers and some were small. Otherwise, we didn't. Your AR group should know their customers that well.
Ed Clarke (eclarke2@aol.com)
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