GPI 327 – Track unbilled shipment dollars, unbilled orders and the reasons for variations.

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All companies are different in their billings methods and time delays.  You may bill everything in just a few minutes with no delay between the order and the shipment,  or it might take your billings clerks three days to cover all of the shipments your hundred and forty-five warehouses sell nationwide.  In systems where there are time gaps or delays between actual shipments and actual billings, track how much money is sitting there unbilled each day.

Have the billings people chart unbilled dollars and as a percentage of total sales for the month (billed and unbilled). You might chart number of orders to see if unbilled orders is rising or falling and why. This will take them a few minutes; ask that they distribute it to the profit center managers to show problems in their operations.  All shipments should be billed immediately since many companies do not start the payment clock until the invoice is received.

Questions to consider:

  • Why are unbilled shipment dollars growing?  Production problems? Employee problems?
  • Why are the number of unbilled shipment orders growing?  Are we not handling orders quickly enough? Do we have enough personnel to get shipments out?
  • Why is the average dollar amount of an order doubled in the last two weeks? What high priced product has increase OR more worrisome, what smaller priced items have fallen off?
  • What happened to open orders? Are we just caught up or is sales falling?  Are the orders not entered into the system?  Is there a reporting problem?  Have we noticed a drop in incoming sales calls?
  • Why did the sales orders of product A fall by 50% last week and is NOT rising?  Check on product A production.  Is there enough on hand? Do we know any reasons why product A sales have dropped from any customer or sale rep comments?

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