Days Sales Outstanding (DSO) is a key metric for many finance teams, and it is what AR teams continually strive to improve. Here are three problems stemming from Proof of Delivery (POD) notes that can delay payment and impact your DSO figures and how to solve them.
For one of our clients, a multinational builders’ merchant, PODs, were a performance killer for the finance team before implementing the Corrivo eInvoicing solution.
Phasing in ePODs
Problem 1: mixed methods. Cargo manifests listing a lorry’s load are essential for crossing borders. With anxieties about changing requirements post Brexit, our builders’ merchant customer was not alone in accelerating the roll-out of ePODs to those of its many hundreds of warehouses, most commonly making cross border deliveries. Some of the supplies involved in construction are classed as hazardous, and suppliers are required to generate electronic manifests to track items through the supply chain. For delivery drivers, correct eManifests can mean successful border crossings or return to depot situations. Getting ahead of the Brexit game meant prioritising key sites.
So, while handheld ePOD devices are being rolled out across the delivery fleet where essential, many depots and branches still use POD notes generated on their company-wide ERP but printed on local, old fashioned and paper-based carbon copy machines. Dot-matrix printers may have died out around the world, but in some specialist areas, they remain part of the process from order into invoice-out and onwards to the stage at which payment is received and recorded on ledgers. Some businesses resort to batching up their signed merchant copies of delivery notes and sending them to a scanning company that cleans them up, scans them and labels them for online archiving. Some PODs are created digitally, but the signature must be captured to provide proof – hence the paper copy or a scanned version of it becomes a weighty part of the data story when assembling invoices and PODs. Some clients use PODs on paper but then scan the signed copy along with a barcode or QR code, but this is not problem-free. Screwed up or wet PODs cause errors – which turn into a reason for Accounts Payable to delay payment. And up goes your DSO.
Solution 1: Using Intelligent Automation to combine machine-readable and human-readable documents
The data from ePODs can be transported as a data string – all the essential information is in a neat, small digital package. PDFs are not as easy to interrogate, and problems can arise if they are incorrectly labelled when scanned. Our proprietary solution is a clever one. So much so, I’m going to give you only the lightest detail but ask you to contact me to find out in-depth. Essentially, Corrivo can identify and assemble PODs from a range of formats and sources and match them against the order for a completeness check before sending an invoice with its associated PODs.
Even if your company is a Goliath of a brand name, it can still have multiple formats in use because, as we know, rollouts of ePODs don’t happen overnight. They’re carefully managed by the operations team for smooth implementation. At Data Interconnect, we’re always keen to recommend the best practice, but we love to solve real customer problems – the reality is, every growing business has challenges as it adapts and changes, and we like to help bridge the gap between current problem and lasting future solution.
Problem 2: Split Deliveries, multiple PODs, means missing PODs
Builders’ Merchants often have split deliveries. One order for a large construction site can easily total £1.5 million or more. One truck rarely carries that much stock. In fact, one warehouse may not even have stock of one item totalling more than £4 million; hence a single order is typically fulfilled from multiple depots or warehouse locations, often by an even higher number of lorries of differing shapes and sizes suited to their specialist loads. For the customer, this means multiple deliveries and delivery notes, rarely received and signed for by the same site manager.
A single line item, say a quantity of roofing panels, could itself total over £90,000. Would you pay a £2.5m invoice if you were not sure you’d received all the goods? The problem of PODs not being where the customers wants them when they want them can cause hundreds of thousands of pounds of working capital to be locked in unpaid invoices – cashflow that is needed for purchasing more stock.
Consider the thefts, insurance, site security guards and wastage issues that occur on building sites. Taking delivery incurs its own risks and costs for the customers of Builders’ Merchants. These are good reasons for their Accounts Payable teams to be ruthless and thorough in their approvals processes before authorising payment.
Solution 2: Seek, match, combine and cement
One order, one invoice, but it can be associated with delivery notes of several colours and flavours. While many eInvoicing systems can churn out an invoice to match an order, few are clever enough to pair multiple PODs in many layouts with one order and combine them to send to the customer along with an invoice. This is an example of Corrivo’s intelligent automation. Not only can Corrivo seek out, match and PODs to invoices, but it can also stitch multiple documents together to form one attachment, so several separate PODs are combined into one attachment. That makes less clicking viewing and filing for the customer’s Accounts Payable team. Brilliant. To manage the exceptions, a slick process is created whereby individual problem PODs are viewed and assessed urgently to prevent invoices going out without a complete set of PODs.
Find out how Corrivo’s intelligent automation addresses these industry-specific challenges with ease. Come back soon or follow us on linked in for more Ps in the POD story.