We do not know which customers are profitable
Take five major customers and sum invoices, credit notes and returns. Use what you find to change the way this work is handled this week.
A gap in the day-to-day record can be easy to miss. Freight, credit days, rejections and follow-up time hidden from the margin. The risk grows when teams use different versions of what was agreed.
What it looks like
- The sales coordinator has to search the enquiry register and order book before answering a routine question.
- Freight, credit days, rejections and follow-up time hidden from the margin.
- Staff cannot locate the accepted quotation or customer confirmation for the latest case.
- People spot the gap after a customer gets a commitment that nobody has checked.
- The open case has no documented owner, due date or proof of closure.
Why it happens
The specific failure is left unchecked. Freight, credit days, rejections and follow-up time hidden from the margin. If there is no recorded owner for that condition, the effect travels to the next team.
The work and its evidence move separately. Requests enter through several people and channels. Without one accepted commercial record, sales cannot reliably distinguish an enquiry from an order.
A later hand-off exposes the gap. Prices, terms and commitments are often confirmed by conversation while the approved record remains unchanged.
The less obvious cause: A control may exist on paper but still fail in practice. Test whether someone actually performs this check: allocate actual freight, service visits, rework and collection costs.
Find the first failed hand-off before changing staff targets. A completed register alone cannot prove that physical work happened.
What to check first
- Take five major customers and sum invoices, credit notes and returns. Compare dates, quantities and references. Mark an unconfirmed difference as unverified. Finish the first pass in under 30 minutes and name the missing source if needed.
- Allocate actual freight, service visits, rework and collection costs. Record the affected item or party and the person who can verify the detail. Finish the first pass in under 30 minutes and name the missing source if needed.
- Compare margin after these costs against gross sales margin. Mark each exception open, waiting for evidence or resolved, with a named next owner. Finish the first pass in under 30 minutes and name the missing source if needed.
How to fix it
- Start with one live case. Take five major customers and sum invoices, credit notes and returns. Keep the source reference before changing the record.
- Make the control explicit. Build a customer contribution sheet updated monthly. Put the rule in the register or sheet that staff already use.
- Set a second guardrail. Review low-margin accounts before changing price or credit terms. Check the customer terms, item specification, rate and delivery promise before treating an enquiry as a firm order.
- Assign the next decision. The sales coordinator records the action and its due date. A separately authorised person signs off changes affecting money, safety or customer terms.
- Review the open list. Start with items affecting today or tomorrow. Keep third-party commitments separate from completed actions.
- Check whether the rule holds. For four weeks, count requests or accepted orders left without a recorded next action. Reopen repeat cases and identify where the control failed.
Copy this enquiry and order exception register into a register or sheet:
| Reference / item | What went wrong | Evidence checked | Action owner | Promised date | Status / decision |
|---|---|---|---|---|---|
| P010 (example) | customer profitability unknown | Take five major customers and sum invoices, credit notes and retu | Sales coordinator | Set at review | Open |
Retain the source reference and limit access to authorised staff.
A worked example
Illustrative example only. A customer buys ₹8 lakh but causes ₹72,000 of returns and special freight over a quarter. Start by locating the source that would verify these amounts or quantities. The sales coordinator records the exact exception, gives it an owner and checks the next relevant event. This example shows how to structure the decision. It does not claim that a business achieved a saving or avoided a loss.
How you know it is fixed
- Completeness: Count requests or accepted orders left without a recorded next action at the same time every week. Record the count and the oldest item, rather than just saying things are better.
- Timeliness: Check whether the assigned person took the next action before the agreed cut-off. Keep missed dates visible instead of replacing them silently.
- Proof of closure: Sample three closed cases and locate the accepted quotation or customer confirmation. A tick without supporting evidence is still an open control gap.
When it is more serious
A major account remains cash-negative after repeated pricing reviews. Hold irreversible decisions until the material facts are verified. For contracts, tax, wages or legal rights, retain source documents and consult a qualified adviser. Repeated exceptions after four reviews may require changing the control.
This works if someone does it every day. In most businesses, that someone is you.
Questions people ask
What should we check before taking action?
Take five major customers and sum invoices, credit notes and returns. Keep its date and reference. Then compare it with the accepted quotation or customer confirmation; if they disagree, record the difference before changing either one.
Who should own the next action?
The sales coordinator should own the open item. The person authorised to change money, a technical standard or a customer commitment must still approve that decision.
Can we run this control without new software?
No. Start with a shared sheet or register containing the reference, owner, promised date, status and evidence. Once those fields are reliable, decide whether a system connection is worth setting up.
When is the issue serious enough to escalate?
A major account remains cash-negative after repeated pricing reviews. Keep supporting records and get specialist help where relevant.