Ordered ten thousand, delivered ten thousand six hundred
Conversion is never exact. A carton job for ten thousand units comes off the folder-gluer with some overs, because you allowed for waste and the run went well. One customer accepts and pays for overs within their tolerance. Another pays only for the ordered quantity. A third wants overs held as stock for their next call-off. A fourth refuses deliveries outside a tight band.
Accounts invoices the delivered quantity, or the ordered quantity, depending on who raised the invoice. Customers query it, payment is held, and someone digs out the order terms.
Tolerances are agreed, then forgotten
Overs and unders are a normal part of the industry, and most customers agree a tolerance. But the tolerance and what happens to overs are often in a supply agreement or on the customer's PO terms, not in the MIS. Production does not know the tolerance when deciding how many to make, and accounts does not know it when invoicing.
- Tolerances are in agreements, not in the MIS.
- Production decides run quantities without seeing the tolerance.
- Delivered quantities per pallet are not always accurate.
- Accounts applies different rules from one invoice to the next.
- Overs held for the customer are not recorded as their stock.
What the disputes cost
Disputed invoices delay payment and take time from accounts, customer service and sales to resolve. Over delivery outside tolerance may be rejected at goods in, with a return trip. Under delivery can leave a customer short. Overs that are neither invoiced nor held properly are simply given away. And repeated disputes make an otherwise good supplier look disorganised.
The quiet leak is the most expensive. Overs that a customer would have happily paid for under their terms are left off the invoice by a cautious clerk, job after job, and nobody ever notices because nobody complains about being undercharged.
Production needs the same information. An operator who does not know the customer's band may run well past the order to be safe, producing overs that will never be paid for, or stop short on a customer who refuses anything under the ordered quantity.
Tolerance aware invoicing we build
- Each customer's tolerance is recorded as a rule: the percentage over and under accepted, whether overs are invoiced, and whether overs are held as stock.
- The rule is shown on the job ticket, so production knows the target band when setting run quantities.
- Delivered quantities are recorded per pallet at despatch, from counts or weights, and totalled per order line.
- Deliveries outside tolerance are flagged before despatch, so you can decide to hold, adjust or agree with the customer in advance.
- Invoices are raised with the quantity the rule allows, and the pallet counts are attached as evidence.
- Overs to be held are recorded as the customer's call-off stock, so they are used for the next order.
| Customer rule | Invoiced quantity | Overs handled as |
|---|---|---|
| Pays for overs within tolerance | Delivered, up to tolerance | Invoiced |
| Pays ordered quantity only | Ordered | Delivered free or held back |
| Overs held for next order | Ordered | Recorded as their stock |
| Tight band, rejects outside | Delivered | Flagged before despatch |
Invoices that match the agreement
Invoices follow each customer's agreed rule every time, with the counts to support them. Deliveries outside tolerance are caught before they leave. Overs are either paid for or kept as the customer's stock, rather than lost. Disputes fall, and those that remain are settled quickly with the evidence attached.
Do overs and unders cause invoice disputes?
- Customers query invoice quantities regularly.
- Tolerances are agreed but not recorded in the MIS.
- Different invoices apply different rules to the same customer.
- Deliveries have been refused for being outside tolerance.
- Overs are given away without being invoiced or held.