09.12.2017 | Posted by Jasmine
Apparel Collections 101: Collecting from Big Box Retail
One of the essentials of running a successful company is effectively managing cash flow. Without cash flow, no company can survive. Cash flow allows companies to cultivate their business, utilize technology, compensate employees, pay vendors; the list is endless.
Many company’s largest orders come from majors. Big-box retailers like Target, Wal-Mart, Nordstroms, etc. You know them, they’re behemoths in every mall. Today you see them complaining that Amazon is cutting into their sales and they’re shutting down stores.
Whether you have been working with these types of accounts for years, or just received an order, you know they have plenty of upsides. You likely also know, if you don’t plan accordingly, they have the ability to kill cash flow. The most important way to protect your cash flow is to follow the terms and conditions of the order. If you do that, generally payment will be made on time without issue. However, we all make mistakes. Below are some tips to help when invoices start slipping through the cracks:
- Follow the terms of the Purchase Order! Read them twice, have someone else read them, then read them again. Then follow them EXACTLY. Slow payments from large retailers can generally be traced back to an issue in the order entry to ship cycle.
- Find the correct A/P person! Often big-box stores have multiple A/P contacts for each department, location and/or vendor name. Be courteous and friendly, aggressive collection tactics with large retailers will likely be ignored. A/P gets invoices ready for payment, they don’t have the ability to sign checks.
- Ensure the invoices are being received and going to the correct location/person. This information will also be included in the terms and conditions of the purchase order.
- Always make sure you have a purchase order number on the invoice.
- Be sure that all parties involved understand and agree to the payment terms of the purchase order so there is no confusion once the invoice becomes due. Review your PO for the agreed upon terms, then confirm with A/P that they show the same. There are times the accounting department has incorrect terms in their A/P system which will delay payment. Remember, your customer will pay only according to the terms in their purchase order. As soon as you accepted the order, you accepted the terms.
- Be clear on what the net terms are. Net meaning that the payment due date for an invoice is 10, 15, 30 or 60 days after the invoice(ship) date. Be aware that often times big-box retailers will impose their own turnaround time on their vendors OR change the term dates according to when the merchandise was received, not shipped. With the latter, A/P can technically gain up to 10+ more days before payment is due on top of the terms!
- Does the retailer have a vendor portal? If so, sign up! Vendor portals can provide all of the necessary information pertaining to your account, invoices, purchase orders and payment at the click of a mouse. Even if you call A/P, they most likely will tell you to visit the vendor portal for more assistance. Don’t let that deter you from calling down the line though if the invoice still not getting paid.
- If you have the correct A/P person but they are unresponsive, perhaps you or your sales rep can reach out to the buyer. Buyers often can provide insight from another stand point as to why invoices are being delayed for payment and you can enlist their assistance to get the invoice approved and paid.
- Check if your customer uses EDI? If so, are you set up on EDI system? If you are set up on EDI, did you ship the merchandise according to specifications? Did you submit the invoice according to the customer’s EDI expectations? If not, you will need to re-submit your invoice. Big box retailers often provide a lengthy compliance guide to follow. Be sure to follow shipment and invoice submission instructions carefully when using EDI-even the smallest mistake can hold up an invoice for payment or end up costing you for non-compliance! Also, diligently following up on invoices and understanding the approval process of an invoice on EDI is important for many reasons but most importantly so that you can catch and address any issues early on!
- When checking on payment in an EDI system, make sure a check is generated on of the day after the promised payment date. Often times we see invoices get “stuck” in the EDI system and no payment is sent out-even if the retailer’s system promised a check on a certain date. If the promised payment date has passed and no check information has been provided make sure to contact A/P!
- Lastly, don’t be afraid to be the squeaky wheel when needed! Being professional and diligently following up will hopefully help you get your invoice to the top of the pay pile! Your A/P contact can push things along with their supervisor, or process your invoices more quickly, be in contact often with them.