“We can get a quote out in two days,” the operations manager of a 40-person electrical supply distributor told me. “So why does cash always feel tight?”
We pulled the timeline on 60 orders that shipped in March. Quote to order: two days, exactly as promised. Then the trail went cold. Ship date to invoice date averaged 19 days.
Where the nineteen days actually went
- 3 days waiting for a signed order acknowledgment that sat in somebody’s inbox.
- 4 days in credit review, because every new-account check ran through one controller by hand.
- 6 days waiting on proof of delivery, which the carrier sent in a weekly batch instead of daily.
- 6 days in the billing queue, where invoices waited for a person to match them to a pick ticket.
At any given moment, $1,240,000 of shipped product had not been invoiced. That is roughly a month of payroll parked in a queue.
Errors made it worse. About 11% of invoices needed a credit memo and a reissue, which pushed the real collection date out even further.
Four changes, done in ninety days
- Order acknowledgments moved to a click-to-confirm email link, timestamped automatically.
- Credit checks under $10,000 got an automatic rule: net-30 if there is no past-due balance over 60 days. Only exceptions go to the controller.
- Proof of delivery pulls daily from the carrier portal instead of waiting for the weekly file.
- Invoices generate automatically from the ship confirmation at 4 p.m. daily. Billing only touches exceptions.
What showed up on the bank statement
Invoice lag fell from 19 days to 4. Days sales outstanding went from 52 to 41, releasing about $310,000 in working capital that had been sitting in paperwork.
Credit memos dropped from 11% of invoices to 3%, which quietly removed about 40 hours a month of rework for two people.
Here is the part worth sitting with. This company had brought in ERP Consulting two years earlier to speed up quoting — and quoting was never the problem. The executives kept measuring the step they were proud of and ignoring the four steps behind it.
That pattern shows up in most ERP Consulting work I have seen. The bottleneck is rarely where the complaint is. Before your next Monday meeting, take five orders that shipped last week and time every step from ship to cash. You will find your 19 days in about 20 minutes.