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VALUE CREATION AND HOW TO AVOID VALUE LEAKAGE FROM YOUR INVOICES

Your Invoices touches more customers each month than any other of your business activities. Invoices are like your business card; they act like a mirror of your company and reflect your image. But how will your image be affected when you submit erroneous invoices? Invoice Accuracy is a critical performance indicator of the Offer-to-Cash process.

At 3R Consultants we have learned that the majority of the invoice errors are created in the “Offer” part of the process. It is one of the main causes of Revenues Leakage and it occurs more often than one wish to admit or is aware off.

With the business IT systems in place now a days these self-inflicted inaccuracies in invoicing like i.e. the wrong price, the wrong quantity, the wrong customer, the wrong VAT remain often unnoticed until the moment the customer submit a complaint or simply do not settle the invoice and consequently the credit team notice an increase in their performance indicators (e.g. Days Sales Outstanding).

Invoice inaccuracies have only negative consequences.

It may result in :

  • Dissatisfied customers increasing the risk of losing the business
  • Late payments and an increase in working capital and interest payments
  • Rework to correct the invoice errors.

These are all elements of Value Leakage or in the worst case Value Destruction that can be avoided. Operational Excellence in the Offer-to-Cash process is often underestimated in its capacity to create value.

Value Creation is one of the many subjects that passionate us at 3R Consultants.

Jeroen de Graaf