Last week we spoke about the problem of underbillings. We identified several reasons why this happens but primarily the root cause is a lack of attention and will to bill effectively and in a timely manner.
Many salespeople believe it to be a chore.
The greater the chore the more we just want to get it done and over with. The more we just want to get it done, the less diligence we place on getting it doing it. The consequence is an underbilled nightmare.
Part of the problem is underbilling’s in the current period has no impact on the cash flow for the current period.
if you have a bit of a cash crunch today, it was created by your underbilling in the previous months.
Therefore, the way we manage our underbillings today will be a key indicator for the strength of our future cash inflows. If we don’t bill it we cant collect it sometime in the future!
No we understand its importance in the future what behavior can we instill that will proactively improve
The answer is to focus on a different GOAL.
In the past our goal was to simply bill.
Here is a better one:
Goal: Each positive should be cash positive after 40% completion.
Such a small change yet with profound impact.
It aligns salespeople with the billing specialists who now share the same objective.
It allows you to focus on projects that are not cash positive after 40% completion versus those that are.
This reduces underbillings significantly. It creates innovative thinking like the way you purchase and how purchasing can help with stored material billings.
Try setting this goal with your teams!