When Trico Industries, Inc. (Huntington Park, California) launched a Total Quality Management (TQM) effort in 1993, it didn't take the credit department long to embrace and utilize the concepts.

Editor's Note: This article originally appeared in the Credit & Collection Manager's Letter, which Credit Today purchased in 2006.

TQM at Trico involves four phases:

1. Identify the problem. "The main problem we experienced was related to past-due accounts," says Cynthia Sykes, CCE, Trico's assistant credit manager.

2. Identify the source of the problem. The credit department studied the complaints and found that the majority of them involved just a handful of the company's 47 stores around the country. (Each of the stores has a clerk who handles billing for that store.)

3. Identify the cause of the problem. The department identified three major causes of past-due accounts:
   1. In talking with customers, it turned out that their major reason for paying late was receiving invoices from the stores without purchase order numbers. This occurred for two different reasons:

   2. The clerks had the PO numbers but failed to include them on the invoices. "When we talked with them, we found out that they hadn't realized the importance of including PO numbers on all invoices," says Sykes.

   3. The salespeople failed to forward the PO numbers to the clerks for billing purposes. In some instances, the clerks sent out the invoices late to customers. In still other cases, the customers failed to receive the invoices at all.

4. Take action. To remedy the problem, Trico's credit department sent detailed memos to all the clerks, discussing the importance of including PO numbers on all invoices and of sending the invoices out on time.
   "We then followed up with telephone calls to the clerks to emphasize the importance of these issues," says Sykes. Clerks learned that sending out invoices without PO numbers was considered an "unauthorized sale."