Everyone these days always starts off by asking me to do a “quick win”. Let’s look at purchasing. Because purchasing is where it is happening –right?
Purchasing is where the money goes out of the company.
Ok, true, but don’t you already have a huge amount of controls around purchasing.
It’s kinda like if I was a thief, and I was going to raid a TV store, would I go in the main door, pick up the TV and walk straight out again?
Of course not! Because there are so many controls! There is a security guard (in some countries), there is a camera. There’s probably an alarm.
So what do I do? I really want those TVs so that I can sell them on the black market.
Well, I might start working at the local TV distributor and make a deal with my friend who works in the store. “I’ll sell you 100 TVs, but I’ll deliver 150 to you”. But the store says, I don’t want 100, I only want 150, so they give me back 50. Then they receive an invoice for 150 TVs, but they only got 100 TVs, so they send back a credit note for 50 TVs. And the Accounts Receivable clerk checks the sales order, and says, “yeah, they only ordered 100… Must be a mistake” and then they book the credit note, pay back the customer, or give them a net –50 on their next invoice, case closed. And there you go, I’ve got my 50 TVs without having to go through the main door of the store.
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