|
|
Question Of The Month
By: Staff
Issue: 2008feb
A DISTRIBUTOR ASKS:“A supplier billed me $300 additional shipping and handling 45 days after I received the initial invoices. I had already charged my clients for the jobs, and most of the invoices had already been paid. When I called the supplier to find out what happened, he said there was a glitch in the system and nobody was charged properly. He explained that the invoices I recently received were for freight charges that should have been billed from the beginning. I apparently ‘owe’ the supplier for these charges, but I have no way to bill it to my clients. What would you do?”
DENNIS BURNHAM, MAS
PRESIDENT
IT’S A SNAP, DIV. OF BURNHAM DEVELOPMENT, INC.
UPIC: ASNAP
The writer says: “I have no way to bill it to my clients.” What does this mean? No computer? No fax machine? No invoice forms?
You should send your client an invoice for the shipping charges and enclose a note that says, “Due to a glitch in the factory’s accounting system, these shipping charges were omitted from the original invoice. We apologize for sending you our billing in two parts.”
Why is this so difficult? Did you promise clients there would be no shipping charges? Do you do business with clients who take unfair advantage of you? You’re not asking them to pay more than they expected to pay. In fact, they got extra time to pay for your services, which include the shipping charges.
As consumers, I think we have all had the experience of getting undercharged on a bill. I’m sure some of us pick up the phone right away and say: “You made a mistake, I owe you more money.” Others stay silent about the error and aren’t surprised when the merchant finds the error and asks it to be paid.
This notion that “I have no way to bill my client” is just an unrealistic view of commerce. The reason the Wizard of Oz gave courage to the Lion and brains to the Scarecrow was to make sure the Tin Man didn’t have a heart attack from working alongside a coward and a fool.
GREGG H. TAFT
SALES REPRESENTATIVE
ROK ENTERPRISES, INC.
UPIC: ROKSOLID
If the supplier has a glitch in its system, this should not affect my business or my clients. The supplier should take the hit. Maybe it would then audit the paperwork better before sending it out to distributors.
Let’s face it—we have all made invoicing mistakes. I have taken the hit for errors on my part and the companies’ part. Some suppliers think it is distributors’ responsibility to know they made a mistake. We should not have to take the hit because of an error on the supplier’s side.
I have never and will never go back to my client for more money because of something like this. Most distributors feel the need to serve their clients to the best of their abilities and won’t go back for the money after the fact. Why upset a client who is going to buy from you again, especially when the error wasn’t their fault? Some suppliers don’t understand this concept. They would rather cause an argument with their client distributors than take the hit when it was clearly an error on their part.
BERNARD “BUD” SOLOMON
ACCOUNT EXECUTIVE
THE VERNON COMPANY
UPIC: Vernon
I would not pay the charges unless the supplier furnished the names of other distributors I could contact to verify that they were also billed because the supplier had a glitch in the system.
In my 27 years in the industry, I have not heard of this type of a glitch. I am sure it is possible, but I would need some proof before I pay a large freight bill.
If there is a late freight charge that is not billed, it is usually because the supplier accidentally left it off the bill. If you decide to pay, you should explain your problem to the supplier and offer to pay half.
MARK ASTLE
PRESIDENT
M.L. SCHUMAN CO.
UPIC: Schuman
This supplier is a bit cheeky, to say the least. If he billed you and the bill was paid, you probably don’t owe him any more.
What about the invoices where he billed you and/or other distributors too much? Is he issuing rebates?
We, too, have made errors in pricing and billing, and we simply eat it.
I feel the supplier needs to write this off and install some controls to see it doesn’t happen in the future.
JANE HALVERSON
BUSINESS CONSULTANT
PRO FORMS
UPIC: PROFP227
I don’t think it’s fair of the supplier to tack on the additional $300 due to a “glitch in his system” this late in the ordering process. It sounds a bit unethical. If it were truly a problem, someone should have called to discuss it. First, find out if this sounds like a fair shipping charge—depending on the order size, where it was shipped, weight, etc. You should be able to get a fair estimate by figuring it online. Then, if it looks fair, I think a compromise between the two of you would be reasonable. It’s the supplier’s mistake; you can be the good guy and help out. Or ask the supplier for a nice deal with the next order. Don’t feel you have to settle for its word. There might be another glitch.
DANON MIDDLETON
COO
TANGO PARTNERS
UPIC: TangoP
The supplier is ultimately responsible for the error, but as you work through the issue, you don’t want to lose the relationship or damage your credit rating.
Having managed operations for a large distributorship for 17 years, I have seen this happen all too often. When a supplier sends an invoice where there is no charge for freight, this raises a flag. But when a freight amount is included on the invoice, it makes sense to assume the invoice is complete. Otherwise, we would work in a paranoid world and have to call suppliers to verify if the invoice is really complete each time. This certainly is not a good business practice, especially when everyone is trying to streamline operations.
This is exactly how I positioned our company when dealing with these situations. Basically, it is a process error on the supplier’s side where a mistake was discovered and the company is looking to correct the situation. From an operations standpoint, I would let them know I understand its position but have already billed the client and can’t send a separate invoice for the freight balance.
Request credit for the freight since the billing was the supplier’s error. Usually you are speaking with someone in accounting—escalate within the department until you are satisfied with the results. If you can’t reach an immediate resolution, go straight to the top and speak directly to the president. Ultimately, the supplier needs to address its processes and ensure this does not happen again.
WENDY VAUGHAN
PRESIDENT
OBP PROMOTIONS & AWARDS LTD.
UPIC: OBP0001
1. I would discuss this with my clients—tell them the truth. If the supplier had a glitch affecting all outgoing orders, this would be huge. If you were the only case, he could at least split the cost with you. I would want to see proof of the charges if I thought the amount looked unreasonable.
2. If I discussed it with my client and he or she okayed the extra charge, then I would bill accordingly. If the client was antagonistic, then I would eat the charge or possibly offer to split it.
3. If my client was a regular customer, I might not mention the freight but would add a little extra profit to following orders until the $300 was recouped.
4. If the freight charge had seemed low to me at billing, I would have contacted the supplier then or padded the freight charges on the client invoice to anticipate further charges.
We handle these problems on an individual basis with an eye to all costs eventually being covered.
DAVE YATES
PRESIDENT
YATES PROMOTIONS
UPIC: YATESPRO
Make sure you are talking to the right person when negotiating with your supplier. Ask for the CEO, president or sales manager—someone within the upper hierarchy of management. Explain in a professional and diplomatic way that you don’t agree with the additional billing you received for freight. If the supplier is honest and ethical, as are the greater majority of suppliers in our industry, they will absorb the freight charges.
JODI BETT CITRON
SALES
PROMOTIONAL MARKETING
The supplier should offer to split the freight bill with the distributor or absorb the $300 charge altogether. It was the supplier’s error, and the distributor should have been informed before the supposed glitch what the estimated shipping charges would be so that he or she could properly bill the client. This was a hefty addition to the invoice, especially considering it was sent 45 days after the original invoice.
ALLAN CHASE
CEO
ARC PROMOTIONAL DESIGN
UPIC: ARCPROMO
The distributor could take the low road and say, “To heck with it, the order is done.” Assuming the supplier is correct (and it is simple to audit the freight costs to determine if this is legitimate), the high road is to take the audited freight figures along with hat-in-hand to the client and say, “This doesn’t happen often, but occasionally freight gets misbilled. You can see by these weights, dimensions and destinations that I accurately billed freight charges to you. My supplier has noticed the glitch and rebilled me. May I rebill you?” The supplier/distributor relationship is a partnership. Assuming this supplier does not make a habit of this, I would line up on its side. Besides, the truth usually sets you free.
BARRY CHASE, CAS
2006 PPAI HALL OF FAME INDUCTEE
What does he mean, “I have no way to bill it to my clients”? That the address is lost or there aren’t any paper or envelopes available to mail a bill? Is the client bankrupt or out of business? Unless any of these are the situation, the distributor is saying that he or she doesn’t want to bill the client. If it is a legitimate expense, just send the bill with an apology and explanation and ask the client to pay the $300. The supplier should have sent the bill with an apology and explanation. And if these are multiple charges, then send multiple bills.
If the client refuses to pay, the distributor should rethink the relationship and negotiate with the supplier. An honest client will understand and pay.
This question, in various forms, has been around as long as suppliers have screwed up billing and distributors have been afraid to invoice clients. The answer is still dependent on the distributor.
MAY’S QUESTION OF THE MONTH
A DISTRIBUTOR ASKS:
“When I ordered a standard badge reel from a supplier, my client called and said the logo was backward on the item. I figured the film was pulled and the screen was burned in reverse—an unfortunate but understandable mistake. I apologized to the client and asked the factory to re-run the job. They did—and they even included a paper proof this time—but it was printed wrong again. Annoyed, I contacted the supplier and was assured the problem would be resolved. The job was re-run a third time, and this time it was the wrong color. Thankfully, my client is an understanding one, but is now pressed for the product. Should I have it re-run again? What would you do?”
What’s Your Answer? E-mail answers along with your name, title and company name to Question@ppai.org by February 29 for possible inclusion in the May 2008 issue of PPB magazine.
|
|
|
|