The Supply Chainsaw Massacre

As those who deal with me in my work as Balatro
know, I'm a one-man band.  I gain most of my knowledge by conferencing,
networking, meeting, consulting and drinking with bankers and
technologists through the Financial Services Club, and all the other events I speak, chair and present at. 

Why am I telling you this? 

Because
I have a range of clients in my Balatro business, and they provide me
with a clear view as to why the financial supply chain does or doesn’t
work.  To give you an insight, I have three sorts of customers. 

• those I invoice with a Microsoft Word document and they pay straight away;
• those
  I invoice with a Microsoft Word document, and they say they need me to
  be set up as an authorised supplier with a purchase order number before
  they can pay; and
• those who need me to be an authorised supplier, and even then they cannot pay. 

Obviously,
I like the first category client the best, especially if they pay
rapidly.  The second category of client is ok too, just a little more
hard work.  The third category of client I have never really
encountered ... until now.   

Here’s the story of the
customer with the most exasperating invoicing process I have ever
experienced.  I decided to call it:

"The Supply Chainsaw Massacre”

I
gained the contract and delivered the work in Q4, so my PA sends the
invoice over on 30th November.  By the end of December, no payment has
been received, so we chase up with a standard reminder email that our
payment terms are 30 days.  After a couple more weeks, no answer, so we
send a reminder ... allowing for the fact that the reminder had been
sent during the seasonal holidays.   

An email comes back: “so sorry, it was the seasonal holidays and so we missed this email, we will cough up straight away”. 

So kind. 

Then the Accounts Payable Department gets involved. 

Oh dear. 

First request: “please quote this Purchase Order number on all future invoices or you will not be paid.” 

OK.  My PA sends back: “so do we need to quote the PO number on the invoice outstanding, which is now 18 days overdue?” 

Two days later: “Yes”. 

So
we send in the same invoice, now quoting the number.  Seems a bit rich
to have us spend days just to cut and paste a purchase order number
into our Word document, but there you go. 

Three days later: “Now we have your invoice, we cannot process it until you complete our supplier survey form attached”. 

Hey,
c’mon.  You’re now just stalling, as you should have sent a PO number
and all this stuff when you contracted with us at the start, not now.   

“OK”, we reply, “here’s your form”.  We’re being polite as we want to be paid y’know. 

A day passes and an email plops into the inbox of my PA: “Please send the form in a non-editable format”.

Duh?  Waddyamean, a “non-editable” format.  You mean post it to you or fax it to you?  What’s your address or fax number? 

“Please send the form in pdf.”   

OK.
Another day passes as we need to use the machine in the office with the
pdf convertor, don't ask me why.  We send the form as a pdf. 

Accounts payable comes back: “Please fax the form to 0207 345 2898”. 

Now
this is getting ridiculous.  You told us to email in a non-editable
form as a pdf and now you want a fax which we asked you about and you
said, no, a pdf will do. 

“Please fax”. 

We send the fax and I decide to telephone to check they’ve received the fax.   

Ring-ring.  Ring-ring.  Ring-ring.   

“This is accounts payable.  Press 1 if you have a question about accounts payable or 2 if you ...”   

What?  1 is pressed rapidly.   

“This is accounts payable.  Press 1 if you want to talk to someone or 2 if you ...”

What?  1 is pressed rapidly.   

Ring-ring.  Ring-ring.  Ring-ring.   

“Hello, Saabir here.   You want accounts payable yes?”   

Me: “Yes, I do.” 

Saabir: “That is I.  How can I help?” 

Me: “Well, my name is Chris Skinner, and I just faxed you with my supplier form.  Have you got it?” 

Saabir: “No sir.  We do not get faxes.” 

Me:
“Waddyamean, you don’t get faxes.  You asked me to send a pdf, then a
fax when this should all have been sorted out before we invoiced.  What
is going on here?” 

Saabir: “We get the fax sir, but we don’t get the fax yet.” 

Me: “So do you want me to send it again?” 

Saabir: “No sir, we get the fax in two or three days and then we will call you.” 

Me:
“Waddyamean, you get the fax in two or three days.  The point of a fax
is that you get it straight away.  I faxed it to 0207 345 2898.  So do
you want me to fax it to your number?  What is your number?” 

Saabir: “No sir, you fax to the right place.  We get your fax in two or three days.” 

Me: “But that’s ridiculous.  Why would it take you two days to get a fax?” 

Saabir: “Because you faxed it to London sir and we are in India.” 

Stunned silence. 

Saabir: “They post us the fax, and then we deal with it when it gets here.” 

Stunned silence. 

Saabir: “And you cannot fax us, because we do not have a fax here.” 

I hang up.   

With
a cost of $5 for a paper invoice that’s processed smoothly, I can now
see why it costs over $50 to process an invoice that is screwed up.
For this firm, it probably costs them nothing, as they have outsourced
accounts payable to India, but it will cost their suppliers $500 or
more to process each invoice.  Or maybe that's just for the supplier
account opening process.  Either way, it left me feeling darned
frustrated and irritated.   

It is examples like these that result in the REL Working Capital
surveys estimating that $1.5 trillion is locked up in working capital
inefficiencies, and firms like this client of mine will just be making
it even bigger. 

Meanwhile, I’m catching a flight to Mumbai to
go and see this efficient, friendly and overall patient (funnily
enough, Saabir is an Indian name that means patient) accounts payable
process in action. 

Oh yes, I forgot to say.  My assignment for this client?  How to improve their financial supply chain services!

Postnote:

If
anyone's interested, the next meeting of the Supply Chain Forum of the
Financial Services Club takes place on 7th April in London from 6.00
p.m. until 8.30 p.m.   Rick Wolfe, President of Canadian firm PostStone
Corporation, will chair a panel to discuss "Credit and Credibility:
What do we expect of our bank?" Rick will be joined by Finance
Directors and leading corporations, including Paul Tydeman, Group
Treasury Manager for Virgin Atlantic, and Mark Abraham, Finance
Director of the managed security firm Wilson James, to discuss:

• How do we rate the banks that serve us?
• What new services do we want in future?
• Where is performance strong?
• What can be better?

To attend, please register here.