Chapter Nine: Finance; September 4
A person’s days are determined;
you have decreed the number of his months
and have set limits he cannot exceed.
|Dated End Times Can Be Managed|
“Did the month end?” The sales guy asked.
“Don’t know,” said the sales manager.
It was September 4th.
On the normal human calendar, August would have ended on the 31st. But when you are attempting to make numbers, some numbers don’t matter. Like the ones on a calendar.
There is confusion in many sales teams on when the books are closed and a new month/quarter/year opens. (This never happened in any organization Your Business Professor was in. No Never Ever Never.)
The bewilderment starts when a sale is made. The transaction is immediately noted as revenue even if no cash is received or any product is shipped.
This is where the pressure for income leads to creative calendaring. Here the Space-Time Continuum is stretched. The sale is booked and the product is not shipped but held toward a later date when the customer actually needs the inventory.
When the customer takes ownership of the product is ignored until much later.
For example, in the ordinary course of commerce, a product is sold in the last week of March. Normal delivery is two weeks. The sale is made in the first quarter and delivered in the second quarter.
Time is needed for a transaction to clear. Simple and honest.
Even the Internal Revenue Service recognizes this. For instance, you write a check dated December 31st and mail it to your favorite tax-exempt charity; it arrives on, say, January 6th. Whenever the non-profit makes the deposit in January, the tax deduction is allowed in December.
(There might be some who would write and mail a check in January but backdate it to December 31st. Or so I’ve been told.)
The actual cash is seen in January but all the accounting action, the debits and credits, are accrued in December.
But there are instances when managers feel the need to inflate or maintain sales to please the stock market, investors, or the boss. Or to make a personal bonus.
The line is crossed when the sales guy calls his favorite clients and asks for a favor. For instance, it is at the end of the quarter and the story will sound something like this,
Sales Representative, “Hello favorite customer, can you reorder the xyz product?”
Favorite Customer, “It’s a little early, we won’t need it for another month and a half…”
Our sales professional is in the running for Salesman of the Year and could win a cruise to Bermuda with golfing at St. George’s (designed by RTJ). He needs this order now.
Sales Rep, “I can get you another 10% off!”
Fav Customer, “Sounds good, but we just don’t have the space for the extra inventory. Sorry.”
Got ‘em thinks the rep, now we’re just negotiating delivery.
Sales Rep, “If you can do a purchase order today, we’ll hold and ship in six weeks.”
Fav Customer, “10 percent off now and we’ll take delivery in six weeks?”
“Does that sound reasonable?” The Sales Rep knows to always answer a question with a question.
“OK,” says Fav Customer, “The P.O. number is 09-04-14-7 and I don’t want to see it for a month and a half.”
The sale is booked and makes the company numbers, but the product is not shipped until much later.
Sadly, the Purchasing Agent left the company and his replacement cancelled the order. But the sales guy still made his numbers in the preceding month.
The company sales representative was taking future sales to make his immediate position look better than it was.
The intent was not to do real business but to deceive.
J.P. Morgan once said that American business must be done with “glass pockets.” Via Dead CEOs quoting Jean Strouse, Morgan (New York: Random House, 1999), p. 5. This should include moving money from one pocket to the other.
A person’s days are determined; you have decreed the number of his months and have set limits he cannot exceed. Job 14:5