They do things differently hereWhat are the key differences with larger companies when it comes to paying their invoices? Separation of responsibilities: It is very rare that the main person you do business with at this large company is the same person who is responsible for paying your invoice. You may deal for example with the marketing, purchasing or logistics manager when it comes to making the sale. But it will be someone in the finance or even specific accounts payable team who is responsible for paying invoices. Geographical separation: This follows from the point above. In an SME, everyone is likely to be in the same office. In a larger company, the Finance or Accounts Payable team will likely be of a size such that they are on a different floor ? or even in a different building from the main person you deal with. In the case of really large global companies, they often have overseas shared service centres for finance and accounts payable. The person responsible for paying your invoice may be in a different country altogether. The purchase order reigns supreme: If you are selling to larger companies you need to understand the critical role of the purchase order. Larger companies will have departmental and team budgets agreed. A purchase order is the internal document that someone must get approved in order to spend some of that budget. The finance and accounts payable team process will invariably require a purchase order number (i.e. the cost has been approved internally) before they will pay the relevant invoice.
What you need to doWhen it comes to the responsibility and geographical separation, knowledge is power. You need to find out how the larger company you are selling to works, who is responsible for what and how best to deal with them. Never be afraid to ask the question(s). Once you?ve found out who the relevant person/people/team is, be sure to have the right contact details. Don?t put yourself at the mercy of getting lost in the switchboard jungle (in the immortal words of M Beat featuring General Levy: it?s massive). Don?t settle for generic front desk phone numbers or finance@ email addresses. It will ultimately be a real person with a name, face, email address and telephone number who is responsible for paying your invoice. Get their details. Purchase orders can be capricious. Never underestimate the importance of chasing them early from large customers who will need them. As a finance director, I?ve sold to supermarkets in working for a small drinks business and large media companies in working in software. I completely appreciate the temptation. You make a sale and you want to get on with delivering it. The last thing you want to be doing is administrative chasing to get the purchase order for this sale. But it will likely come back to haunt your cash flow if you don?t. If you know you are going to need one, be on the case with obtaining the purchase order from day one. And if you don?t know whether you are going to need one, be sure to ask.
And finally?.Larger companies are renowned for using the power each yield?to enforce longer payment terms on suppliers. Our sales to supermarkets were always on 90-day payment terms. Doing all of the above alongside following the housekeeping of watertight invoices and effective chasing will ensure that you give yourself the best chance possible of getting paid after those 90 days. At the same time, 90 days is a long time to wait for your cash. Make sure that you are able to cover your costs in the interim. If you do need to release cash from those invoices in advance of payment date there are options available to you. There are some great invoice discounting marketplaces like Market Invoice,?where you can borrow against those invoices to fund your business growth. I hope you found these tips on selling to larger companies useful. If anyone does have any follow up questions please don?t hesitate to contact me via the Q&A link below.
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