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Do Your Customers and Prospects Understand Their Invoice?

understanding your invoice

Our customers are typically strapped for time, and do not want to take the time to understand and question their invoice. Our competition sometimes prefers that the customer remain confused and distracted from the charges on their invoice. Do your prospects trust their current supplier? Should they trust them? Do you ever feel the “Big” competitors have an entire team of financial types searching for ways to add fees and drive up revenue? Well, that’s not far from the truth. When buyers began to demand the lower prices on garments, some of the “Bigs” developed add-on revenue drivers that are hard to spot and to understand. The line item seems so small, the customer often misses subtle changes that add up to significant dollars over the life of the contract. Knowing the difference between one-time and weekly charges can make a substantial impact.

example invoice

click the image for an expanded view

A Universal Unilink Member recently submitted another invoice with cleverly titled line charges designed to drive up revenue. In this case, the customer will pay nearly $250 annually for $15 worth of emblems for a new wearer. This invoice shows a one-time charge with some very nice margins, but a closer look at the invoice shows they are also paying two additional weekly fees for emblems called an “Emblem Advantage, and Prep Advantage.” These weekly fees are sold as a means of reducing big invoices and spreading the charges out over time. The problem with this is it looks like this wearer will pay the one time set up fees (invoice lines #8 & 9) of $100, and then be added to the weekly charges. The customer is already paying $2.86 in weekly charges for prep and emblem (invoice lines 2 & 3) or nearly $150 annually. Does this customer know if they are to pay weekly or up front for each wearer? Typical accounting systems do not provide multiple options for billing. The invoice the following week or after would most likely show an additional quantity of emblems on the weekly billing if the mistake was not caught. Other items to highlight to this customer regarding their invoice:

  • Lines 1-7 are coded as “UF” (column 7) which means they are recurring weekly charges. Lines 8-11 are coded as “U” (column 7) which means they are one time charges.
  • Weekly rental rate for 5 changes is $11.67. I think there is a potential savings there!
  • No replacement rates for loss or damaged merchandise. They should get a copy of contract and current replacement rates from their current supplier
  • Service Charge is nearly 15% (line #14), and no indication of percentage charge on the invoice. Another opportunity to compare contractual vs. actual.
  • Uniform Advantage charges (line #1) are most likely another weekly charge for uniform damage charges to avoid the big one time charges. Has this customer been charged for damage? Another opportunity here for a double charge, and again, no replacement rates so they wouldn’t even know if the charges would be accurate.

If you have competitor’s invoices you would like to have “critiqued,” send them to us. We can help you educate your potential customers so they can make informed decisions, and protect their bottom line. If you have examples that you would like to share with other Members so that they may be informed, please send those in as well. E-mail them to garydean@universalpa.com, or fax to 864-879-2937.
Much of our focus this year at our Annual Conference in Orlando will be on helping our Members compete by properly educating prospects on invoices and charges. We encourage you to provide examples to share with others, and suggest topics or issues related to competitor invoice practices that others may benefit from. We think it is important that customers not only receive the savings they deserve, but that they can trust their supplier. We can help!


 

Gary_Dean_headshotGary Dean
Universal Unilink
Director of Industrial Laundry Division,

(888) 830-7872
garyd@universalpa.com

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