SMU Opens Pandora’s Box – Nominal Weight Invoicing for Flat Rolled Steel
Earlier this week Steel Market Update was contacted regarding articles we had written literally a few years ago called “Steel Buyer Basics”. Steel Buyer Basics discusses a number of topics but much of the information is concentrated on flat rolled steel billing methods. You can read the articles in the research section of our website and they are free to the public. Go to www.steelmarketupdate.com and click on the Research Tab and then look for Steel Buyer Basics.
The gentleman who contacted us this week was interested in learning more about the nuances of billing methods and invoicing practices – quite a touchy subject for Steel Market Update as we have strong opinions on the subject stemming from our 31-year selling history. The company asked if we had specific recommendations as to how invoices – especially those for sheet steel or plate – should reference the billing method being used. This particular company was having an internal debate regarding the issue of theoretical nominal weight billing with the sales department in support of no reference while the individual with whom we were speaking was looking at the issue from a corporate perspective and trying to determine “industry norms.”
What was not in debate was the practice of theoretical nominal weight billing (TNW or Book Weight) which is a common practice for the sale of sheet and plates. The issue was one regarding the industry norms for invoicing.
What was our suggestion…?
Steel Market Update believes ethical companies reference the billing method being used on invoices, quotes and order acknowledgements. This is a clean way for steel companies to meet their obligation of being up front and honest within the customer/supplier relationship.
We spoke with a long-time contact within the service center segment of the industry regarding the invoicing question. The person with whom we spoke is in sales and supported the theory that all sheets are sold either on a nominal weight basis or price per sheet (PPS). From his perspective the industry norm was to sell sheets on a theoretical (sometimes called “book weight”) rather than an actual weight basis.
However, the employer of our sales source company policy was to address the issue up front and directly with their customers by putting the billing method in all quotes, order acknowledgements and invoices – on the face of the document.
SMU is aware of other companies who bury the billing method – especially nominal weight billing – in the boiler plate on the reverse side of the invoice.
Many companies ignore the subject all together and do not reference a billing method on the invoice at all.
To the best of our knowledge there is no “industry standard” regarding the notation of billing methods on invoices.
SMU believes this is a very interesting subject to both service centers and their customers. We would like to learn more about how the industry perceives theoretical nominal weight billing (book weight) and what the industry norm should be regarding nominal weight invoices.
That's why we are doing a survey, asking the following three questions:
The “normal” billing method for flat rolled sheet steel is? 1) Theoretical Nominal Weight (TNW or Book Weight), 2) Actual Scale Weight, 3) Price Per Sheet (or Price Per Piece), 4) Theoretical Minimum Weight (TMW).
The billing method should be reflected somewhere on the invoice to the customer? 1) Yes, 2) No
If you responded “Yes” to the above question – Where should the billing method be referenced? 1) On the face of the invoice, 2) On the back of the invoice, 3) Somewhere else (please specify) on the invoice.
Here is the LINK to our Nominal Invoicing Survey.
We welcome your opinion and we also encourage written response which can be sent to SMU at: firstname.lastname@example.org
Don’t understand the terminology “Theoretical Nominal Weight” (TNW), “Book Weight”, “Nominal”, etc.? Go to the research section of our website for more details and explanations: www.steelmarketupdate.com.