A somber, dull morning. It’s the beginning of a workday in a typical
Soviet Russian wholesale and retail trading company (70% wholesale, 30% retail).
The Manager (M) bursts into the sales department, waiving a stack of Letter format printouts:
M: Hey, what the hell have you guys done?!
The Sales team (S) (baffled and offended): What’s the problem, boss?
M: "What’s the problem?" You, idiots, look what you’ve done! We got a hell of a lot receivables again! We ain’t got no stock, and we ain’t got no cash either! What the hell were you thinking of? And how many times do I have to tell ya! When do I expect the money? What do I tell suppliers? They’re halting shipments! What are you gonna be selling next week, you knuckleheads?
S: Boss, that’s a pretty shaky claim. We only sell on credit to those customers who you told us to. No one’s ripping us off, everybody’s paying little by little. What is it exactly that you want from us?
M: Yeah, everybody’s paying, but where’s the damn money? It doesn’t take a rocket scientist to sell without taking money, but what we need is to get some cash! I pay you cash not receivables. When is the money coming in, guys?
S: Well, emmm, really?.. We’re not some collectors, we’re sales people! We need to sell, right? Anyhow, we sit here late into the night, enter those damn orders we get in emails into the system. And it freezes every now and then. Now, you need to decide, what do you want us to do: sell, or forget everything, get on the phone and start bullshitting customers into paying us faster? Look, you’ve got some spongers in accounting; all they do is drink tea and shift papers from here to there. Perhaps you’d give them something to do? Rather than wasting time of the busy people here…
The Manager runs off, cursing on his way out.
The Manager enters the accounting department, having already calmed down a bit. He drops onto a chair and speaks to the Chief Accountant (a stout fifty-something year old woman — CA): Tell me, Jane, how come that it happens? We take products from suppliers on credit, right?
CA: We do, indeed.
M: We sell them on credit as well, but the terms are always shorter. Right?
CA: I guess.
M: We’re not in the red, there’s always some profit anyhow, right?
CA: Thank goodness, we still have something to live on, for now.
M: There’s no stale stock either; we manage to get the turnover in time to pay suppliers on their credits. Right?
CA: Well, you’d know better, you are the boss. I’m not really into all those new-fashioned turnover things. For all I care, if the numbers match after all.
M (cursing through clenched teeth): So where’s the damn money? Why is there no money?
CA: Who knows? Don’t you worry so much. We’ll have lots of money, some day we will. Remember what they taught us at school in good old days? "Nothing goes nowhere or comes from nowhere for nothing." We’ll find it!
Don’t worry, if this short play doesn’t remind you anything. This is how Feniks?, a wholesale and retail trader of electronics and appliances from Samara (a million-plus city), used to be like.
So to say, a picture of how it used to be "Before".
Now, an "After" picture (after 72 days — the time it took to transit to dia$par and an online store based on the standard web-UI).
The effect of the use of the accounts receivable control system:
The size and term of credit can be set up for every counterparty.
When one or the other is exceeded, shipments to this counterparty are automatically put on hold (option).
There’s a customizable notification system: messages about payment deadlines may be forwarded by email or sms to staff, customers — anyone. A separate notification is sent about accounts receivable overdue.
There’s a customizable mechanism for charging employees/counterparties penalties (and removing them), depending on payment discipline (including rebate reward schemes for accuracy of payments within a certain period).
Some basic reports: overdue accounts receivable report (counterparties, amounts, dates) and projected cash inflow as a result of debt repayment.
There’s also a payment schedule — an instrument that is not directly related to accounts receivable control, but has a significant importance in managing cash outflows towards suppliers: it shows which entities have to pay, how much and whom for the deliveries that had been already carried out.
Well, these are the before-and-after pictures with exactly 72 days in between. No scam, just dia$par.