What your small short payment actually costs SME’s:
One of the most irksome occurences in the life of a small business is when people pay your invoices AND round down.
First of all – I dare you to try and round down at your local supermarket, paying your bond or car and one of two things happen: You don’t get your goods or you suffer with interest and penalties.
So why in the name of fairness do some people think that they can get away with rounding down when paying a small business?
We recently had an out of town client pay an invoice less 80 cents and that petty action made me so disappointed in the entitled manner in which some people breeze through life.
When it was pointed out to him the reply was “It is only 80c, I am sure that you can afford it!”
Let’s break that 80c short payment down into what it really cost us:
- The path to this sale took much back and forth on the e-mail (at least 30 minutes more admin time than our normal sales).
- The client refused to complete the transaction via our online shop and demanded a manual invoice (another 15 minutes of admin time).
- Then the client demanded to be able to pay COD (add 5 minutes admin time).
- We, after advising the client over two weeks of back and forth that payment in full had to be done before 10:00 am to ensure overnight delivery, received short payment which meant that the despatch clerk had to get special permission to courier (another 10 minutes admin time) the item.
- In addition to the short payment we received a SHOUTY e-mail demanding that we despatch immediately and overnight (an extra charge).
- Now, if we had received full payment we would have made a plan and absorbed the additional charges for overnight delivery from Friday to Saturday so; “Sorry for you budddy – treat others they way you want to be treated is my motto!”
- Now we have to pass a credit note (10 minutes admin time).
- Also that 80c short payment will result in 7c less to be paid over in VAT.
At the end of the day that 80c short payment and general mess around over two weeks cost us 75 minutes extra admin time – lets say R350.00 in order to be generous to the client – AND it cost our fiscus 7c in VAT. All for a R1 200.00 odd sale – WTF!
The above figures may not seem to be a lot but multiply them by 100 over the course of a year and the amount represents a significant amount of money that could be plowed into better and cheaper service for all.
