Brian Linde, Evan Lohbeck, Jackie Miefert,
and Kristin Wuest
April 30, 2003
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Problem: Customers paying bills late.
The mission statement for our problem is derived from Brian’s lawn care service. The
following objective is a concern that Brian has decided to address.
Objective (goal): Reduce past due bills of greater than 15 days by 70%.
Brian keeps all of his previous billing records on file. We used this information to find
out how many bills for last seasons work were paid after 15 days of due date and the
reasons for bills being paid late.
Bills Outstanding for each month of the business season:
April: 12 bills
May: 9 bills
June: 14 bills
July: 13 bills
August: 10 bills
September: 11 bills
October: 7 bills
Average Number of Late Bills: 10.857
Bills Over 15 Days Past Due
0Number of Bills
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Reasons for Late Payments
Category of Reason for Late Payment
We all sat down and first tried to decide what categories to use with the title for the head
of the fish. Kristin suggested that we use the categories used in the notes. After more
consideration and discussion we decided to use a combination of the notes and our own
categories, which seemed to be more applicable. Brian gave most of the causes because
of his first hand knowledge.
Waiting for payday Did not see the bill Lost bill as important Vacation
No system for
No penalty for late payments notifying
customers No reward for early payments
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Brian discussed what each cause meant in relation to the customers. After we listened and asked questions about the causes, we all placed a numerical value on the strength of the causes.
1. No penalties for late payments.
2. Customer does not view bill as a priority.
3. No discounts for early payment.
4. Waiting for payday.
Criteria for Voting on Solutions:
1-low strength; 5-high strength
Causes Average Score
No penalties for late payments. 4.5
Customer does not view bill as a 3.5
No discounts for early payment. 2
Waiting for payday. 1
Evan led the discussion on this topic because of his discussion with Matt Ford. We all agreed that the last step should probably resemble some type of belief for the customer or Brian.
*Cause One: No penalties for late payments
-Why? – To retain customers through keeping them happy.
-Why? – Because satisfied customers are what keep the business operating.
-Why? – Dissatisfied customers go elsewhere.
Because a more desirable service is what the customer want. -Why? –
-Why? – Because Brian believes that if he tries to enforce a late fee then
customers will become dissatisfied with his service.
*Cause Two: Clients do not view the bill as a priority.
-Why? – Because the cost is not associated with the operations of the customer.
-Why? – The customer thinks that the lawn service is one of the minor expenses.
-Why? – Because it is a small cost and it will not disrupt operations if not paid.
-Why? – Other bills with a higher priority will disrupt operations.
-Why? – Because other bills like gas and electric can disrupt operations and the
customer believes that the manicuring of their lawn is not as important.
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Our main focus was to keep customers satisfied and recover payment sooner. We agreed with Jackie’s suggestion of giving the customer slack with the late fees and discounts to counteract them. After we put the idea on paper, we all agreed it was the best method.
Root Causes Solutions
Belief that late fees will deter business. Implement penalties on a trial basis with
generous boundaries; simply ask customers
to pay bills sooner.
Belief that lawn service bill is not Offer discounts for early payments;
important. articulate how important the image of a
professional looking lawn is to reputation
and therefore business.
Brian’s lawn care service is a one-man business. He does not have any issues with
implementations except for those with the customer. We observed no resistance from the customers because of the generous boundaries set forth and the repor that has been built up.
1. Send letters to current customers about the new policy.
2. For the month of implementation, put an additional letter with the bill describing the changes.
3. From the month of implementation, on out, print notice of a late fee and discount on actual bill.
Our previous average for bills greater than 15 days past due for the season was 10.857, with a goal of a 70% reduction. That reduction would result in a new average of only 3.257 bills over 15 days past due. The line graph below illustrates April’s invoices and the number of days late for each. The average days past due for April’s invoices was 4.9. This means we over shot our goal and reached a 100% reduction for the month of April as depicted in the line graphs
0Days Past Due
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0Days Past Due
Bills Over 15 Days Past Due
Number of Bills2
AugustUsing the c-chart formula, we calculated the upper and lower control limits for the mean.
We did not plot the data because we have only one month’s worth and need a few to Septembermonths to interpret the data in relation to the UPC and LPC. Using the Formula we
calculated an UPC of 11.54 and a LPC of 0. We think that a control chart should be Octobercreated quarterly to check if the process is holding the changes. If not, then Brian should
start calling customers to find out why bills have not kept around the same days late. April 03
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Control Chart for Invoices
Days Past Due2
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