What Could Possibly Go Wrong?

You Don’t Have the Cash Until You Have the Cash

     So many things can occur to prevent you from getting cash when you expect it, starting with the buyer’s payment process, continuing with your receivables collection process and ending with your bank’s deposit receipt processes. Consider these examples:

Buyer’s Payment Process

• Items must be received in good order and checked against the purchase order and your invoice.
  • What if items are missing or damaged?
  • What if the buyer receives the incorrect number of items?
  • What if the buyer receives the right item but the specs are wrong (you sent 1 inch widgets instead of 2 inch widgets).
• Purchasing must instruct Accounting to pay the bill.
• What if Purchasing delays in approving payment?
• What if the person who writes and/or approves the checks is out sick?
• What if management, in an effort to improve cash management, decides to delay sending the check?

Your Receivables Collection Process

• The invoice must be prepared and sent to the buyer.
• What if the invoice is incorrect as to amount or quantity?
• What if the invoice gets sent to the wrong address or wrong person?
• What if you miss the deadline for submitting the invoice to the buyer so you can be paid this month?
• You must collect the money.
• What if the buyer sends payment to the wrong address?
• What if the buyer delays payment, claiming an error when you know the invoice is correct?
• What if the buyer, unknown to you, is having financial problems and cannot pay?

The Bank’s Deposit Receipt Process

• Your deposit has to be credited to your account.
• What if the bank credits someone else’s account because the teller transposed the numbers when entering your account number?
• What if the bank refuses to accept the check for deposit because it is a third party check?
• What if the check bounces a few days after you deposit it because the buyer’s bank account has insufficient funds to cover the check?
• You must have good funds, available for use
• What if the bank places a hold on your deposit?
• What if you are paid by wire transfer, but the instructions are not correct, so the money never gets to your account?
• What if you are paid by ACH or wire transfer and, though the funds are sent today, they will not arrive into your account for a day or two?

     Some of the preceding hypotheticals may seem outlandish but I assure you that either me or my clients have experienced at least one of them. Assume nothing, and don’t rest until you know you actually have the money in your possession.