Story 1: The Cash Flow Disaster

A mid sized retail company found themselves conducting a big part of their business via EDI.  Customer demand was high, shipments are up. They began to notice that more and more invoices were not being paid, and accounts receivable was growing. Discussions with customers revealed that the invoices were not being paid because they contained EDI syntax errors and needed to be corrected.   The EDI group within the organization was contacted, and at first they were in denial that a problem existed at all.  After going back and forth between the customers and their own EDI group, the management confirmed that there were issues with EDI which continued to effect new invoices.  The customers refused to switch to manual paper invoices and the company found that correcting EDI data manually was a very time-consuming process, highly prone to errors.  In addition to the unpaid invoices, the penalties for errors continued to grow damaging realized revenue even more.  AR was over 6 months overdue on many invoices.

The management finally tried looking for external help but it was too late, despite a healthy orders book, they were forced to close the business due to insufficient cash flow.