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Old 10-14-2010, 10:56 PM
 
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Can anyone help with this? Your biz has a P.O. from a company, and some of your product is out of stock. What is the proper procedure?

Also, does anyone have a good resource for basic elements of running a small business (this is a real company, not a home-based thing, etc.).. just basic info/questions of day-to-day operations, proper procedures, how to grow the thing wisely, etc.
Thanks!
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Old 10-15-2010, 06:59 PM
 
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Happens to me often in my company. Just tell your client the truth, they will understand. Try to nail down the length of the backorder and tell the client.

No specific books on how to understand business; however, you should learn basic accounting forms like a balance sheet, income statement, profit and loss statement (often called P&L). You should also know how to figure profit margins so you set acceptable selling prices for your products.

You can set up a free website through various providers and get a domain for under $10. You can make your own business cards for under $10 as well and get some samples of your products along with a brochure and get some face to face time with purchasing managers. I was able to get 5 clients this way last year and I continue to build relationships with them.

You could also find meetup groups that deal with business and join up with them to pass more information about your business and use them for referrals.
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Old 10-18-2010, 01:12 AM
 
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Thanks for the info... but still wondering.. what is the proper business protocol for handling back orders..? is it standard practice to notify the company by e-mail or phone call, then do you keep the invoice total the same, or do you reissue a new invoice with the new total?
Then when they get the invoice for the order they will see (item #999- BACK ORDER).. so then when the product comes in, you issue a new invoice (obviously), and send it with that shipment...?

And is this something that should be kept track of by the accountant or the shipping person?
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Old 10-18-2010, 10:45 PM
 
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I would do both just because some people don't like e-mail. (I know it's crazy in the 21st century but some people are like that also it protects you in case the e-mail got "lost" or "I didn't get it"). If you knew and were 100% positive that you could deliver the product within a week then you probably could invoice on the same bill as long as your client was OK with that (could be tough in today's economy). I think it's less stressful if you use 2 invoices just because stuff happens as described below.

I own a snack distribution company. Part of our lineup is Jack Links beef jerky and the last 2 months have been hectic because they import their beef from Brazil. There has been a dispute between the USDA and the Brazilian government over the preservatives used in the beef so Brazil halted all exports of beef causing a huge shortage nationwide. In our case, I informed all my clients face to face of the backorder and just invoiced product that I physically delivered which I believe to be the best strategy because it keeps your inventory in line (plus your AR people happy).

You could do one invoice in 2 parts, let's say #123A for the product that you have and #123B for the product to be shipped and keep it under the same P.O. I do this for clients that want their snacks separate from the jewelry and/or other items.
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Old 10-19-2010, 05:30 PM
 
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When you can't fill an item off a PO and you have the right to backorder (see below) you should issue an invoice for only what is shipped on the date of shipment. When the backordered item is available and shipped you invoice it. I say that the invoice for the backordered item has a new number (as opposed to calling it xxxxxA, xxxxxxB, xxxxxxC). Many companies do not have the capacity to differentiate non numeric characters in invoice numbers.

See below for PO strategies.


When you issue a PO, specify the procedure you want followed on backorders. Say "no backorders, fill all items by xx/xx/xxxx or PO is canceled." Or say, "contact PO signatory by email for approval of backordered items" etc.

PO's should have your terms and conditions on the reverse and should reference them, "Acceptance of this PO constitutes your agreement to the terms and conditions set forth on the reverse side hereof, etc."

I have really good "buyer side" PO language if anyone would like to see it, DM me.

Last edited by Wilson513; 10-19-2010 at 05:57 PM..
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