Wholesale: where the terms agreed with each customer actually live

A customer rings the office and asks why the invoice shows a price that isn’t the one agreed. The sales rep says that a month ago, in a meeting, he agreed a lower price with them for one product group. The invoicing clerk says the system still has the old price and nobody told her. They are both right, and nobody can point to where the agreement was written down.

In wholesale this isn’t unusual. When every customer is a little different, the terms agreed with each one are among the most important information in the business, and often the worst kept.

What the terms with a customer are made of

Price is only part of it. Ask a sales rep what has been agreed with one of the bigger customers and the list usually looks like this:

• prices or discounts on certain product groups
• a promotion valid until a given date
• payment terms, and what happens when the customer pays late
• the amount up to which goods ship without asking
• the minimum order, and who pays for delivery
• delivery days and addresses
• who on the customer’s side is allowed to order
• where invoices are sent

Every one of these affects the order. If it sits in an email, in the rep’s notebook or only in his memory, every order is a fresh chance to get something wrong.

The order should know the terms when it is entered

Orders in wholesale arrive in several ways. The rep enters one at the customer’s premises, the customer rings the office, sends an email or orders directly. Whichever route it takes, at the moment of entry the system should offer the agreed price and flag anything that departs from the terms.

That doesn’t mean a rep can’t approve an extra discount. Sometimes that discount is exactly what closes the deal. It only means that any departure from the terms has a reason and the name of whoever approved it. A few months later those entries show whether discounts were the exception or had become the rule.

Once the terms are recorded in one place, customers can see them too. A portal where a customer sees their own prices, open invoices and how far their order has got takes away much of the “how much do we owe?” and “has it left yet?” calls. The rep then has time for conversations that bring in new business.

The credit limit is checked before loading

A wrong price is corrected with a credit note. Goods delivered to a customer who already owes too much are much harder to put right. If the debt is only checked when accounts get round to looking at open items, the lorry may already have left.

When the limit is part of the terms, the check happens by itself. An order that exceeds it doesn’t go to the warehouse until someone approves it, and the rep sees that straight away, so he can ring the customer before the goods are packed rather than after.

When the purchase price changes

A supplier sends a new price list. For the business it means some customer agreements are no longer profitable, and nobody knows exactly which.

If terms are recorded by product and with a validity date, the question “for which customers is this product now below the margin we set ourselves?” gets an answer in a minute. Those customers can then be spoken to before the next delivery, not after the month-end figures.

The same goes for promotions. A promotion with an end date stops on its own. A promotion without one is easily forgotten and stays in force far longer than anyone intended.

Most wholesalers already have an ERP

There is usually an ERP or an accounting package with stock control. It keeps invoices, stock and the books, and it should carry on doing so. Terms, approvals and exceptions are work that happens before a document exists, which is why they often stay outside it. We wrote about this in The ERP is live. So why is everything still agreed over the phone?

The route that usually pays off is not replacing the ERP but a system for terms and orders connected to it. Terms and limits go into the order, the order goes to the ERP, and stock levels and balances come back to where the rep can see them.

A test before any software

Sit down with one sales rep and write down everything agreed with one larger customer. Then give that sheet to the office and the warehouse and ask what they already knew. If most of it is known only to the rep, it is clear where the business loses time and money. Finding that out didn’t require buying any software.

We design and deliver systems that keep customer terms in one place and tie them to every order, as part of our CRM and ERP systems service. Once you have written down the terms for that one customer, send us the list. It usually shows where it makes sense to start.