ERM-BC-COOP: Invoicing Mistakes Threaten Cash Flow

WebCPA published an e-article titled Invoicing Mistakes Threaten Cash Flow (http://www.webcpa.com/article.cfm?articleid=30910&pg=ros) that points up yet another reason that organizations need an Enterprise Risk Management (ERM) program.

An organization's financial well being is critical for everyone - employees, stock/share holders, lenders, customers, vendors.

Sending out statements and assuring that payments are made promptly is a large part of assuring that financial well being.

The WebCPA article also points out that collecting debts also can provide an insight into the organization's relations with its clients. If a client that normally pays on time starts extending the payment due date, is the client unhappy with the organization's product or service ... or is the client feeling its own financial pinch?

The article promotes use of a software program to make billing more efficient, but for the ERM practitioner, the primary issue is assuring the bills are conveyed to the customer in a timely manner and that the customer pays on schedule.

The ERM practitioner IS concerned with the "corporate image."

The EMR practitioner IS concerned with the client's financial health.

The ERM practitioner IS concerned with that the organization's vendors are paid on time (to maintain or improve the organization's credit/D&B rating), that the vendors have a business continuity plan to assure continued wares "no matter what," and that the vendor's product meets the organization's quality standards.

The WebCPA article notes that the economy makes it important to make certain bills, and "nags" if necessary, are sent at the appropriate time. As an ERM practitioner who has his own bills to pay, I want to assure in so far as possible, that bills - and nags - always are sent at the appropriate time, regardless of economic conditions.

One thing to bear in mind, a lesson I learned many years ago.

You are in business making widgets.

Who is your competition?

Everyone.

Not just other widget makers, but everyone.

Your customer has, say, $1 to spend.

That dollar can be spent on your widget, be put into a savings account, be used to pay for groceries, but it only can be used once.

The same holds true in the commercial world - get the statements out on time so if your client has to make a choice as to who to pay, your organization is first in line.

John Glenn MBCI, SRP
Enterprise Risk Management/Business Continuity practitioner
JohnGlennMBCI @ gmail dot com
http://JohnGlennMBCI.com