That Was A Really Expensive Dime
Rodney, I have a question about the invoice you just entered.
Okay.
One of the line items has a part number XJ-7214C and a price of ten cents. Can you tell me what that line is for?
I don’t know. Stewart is the one who got the quote. I’ll see what I can find out.
Okay, let me know.
The man on the phone was Phil Whitaker, my boss’s boss’s boss. Phil had to approve the invoices. Actually, I didn’t have much to do with them. I was a check in a “check and balance” process.
At our company, individual engineers would get quotes from suppliers. Once the Project Manager approved the quote, it would come to me to be keyed into our order processing program. I couldn’t get quotes and the engineers didn’t have access to the order processing system. The idea was to make it hard for someone to abuse the system.
Hard, but not impossible. They still tell the story of the PM who managed to order a snow cone machine and hide it in an order for computers. (I didn’t process that one.)
The point was, I was often ordering things for which I had no clue how they worked or what they were. Orders could be as small as $1501. The largest I did was $1,100,000. The one Phil called me about was in the $250,000 range. I went to talk to Stewart.
Stewart, Phil asked me to find out why we have a line item in your PO for ten cents. Did we buy something for ten cents?
Tell Phil not to worry about it. The PO is fine and we should just order it.
Yeah, but I have to tell him something. Or, you can tell him if you’d like?
So, we set up a conference call with Stewart, the engineer, me the data processing monkey, my boss who was now interested in this, and Phil, the senior director for our division. Phil started us off,
So, why are we ordering something for ten cents?
We aren’t. The bid is for an entire system, the line items are not intended as stand alone purchases.
Okay, but I don’t understand what that has to do with the ten cents. . .
Look, the quote is for an entire system for $250,000. That’s what we asked for and that’s what the client provided.
Oh. . .I get it. We’ve probably spent way more than the dime just figuring out why that line was there.
What Phil had figured out, and Stewart had delicately explained, was that the vendor was selling us an entire system for set price. In order to meet that price, certain items on the PO had to have their costs adjusted. The issue wasn’t the $0.10. The XJ-7214C part that it was referencing obviously cost more than a dime, but the client chose to show that piece of the bid as ten cents so that their overall bid had the correct price.
And they had to charge something, otherwise a $0.00 would raise even more red flags.
But, Phil’s second point was even more important. At a conservative rate of $50/hour, and four people for a 15 minute phone call, we spent $50 trying to figure out a ten cent charge.
I can’t really blame Phil for wanting to understand exactly what was in the invoice. After all, he still remembers the snow cone machine.
Rodney M Bliss is an author, columnist and IT Consultant. His blog updates every weekday at 7:00 AM Mountain Time. He lives in Pleasant Grove, UT with his lovely wife, thirteen children and one grandchild.
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