Chapter 4: Establishing Good Billing Practices to Avoid Collection Headaches From the book Credit and Collections Kit for Dummies Pictures used are sourced through google and freepik

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4. a) Billing practices are part of your customer relationships from the
time they fill out their credit application.
b) Good billing practices help you avoid conflict, avoid and overcome
customer arguments, and collect delinquent accounts.
Consistency translates into dependability. If a customer disputes a bill,
your customer will become defensive (or perhaps offensive). When an
account is past due and frustration starts mounting, it’s human nature for
your customer to go on the attack. If you create the opportunity, your
customer will complain that she “always has problems with your billing
system” or that she “never understands” what she’s being billed for.

5.  The customer’s name
 How long that customer has been with you
 Optionally, a contact name and phone number
for the customer
 Seven columns for the total amount the
customer owes you:
 The grand total the customer owes you
 The portion that’s current (within selling
terms)
 The portion that’s 1 to 30 days past due
 The portion that’s 31 to 60 days past due
 The portion that’s 61 to 90 days past due
 The portion that’s 91 to 120 days past due
 The portion that’s more than 120 days past due

7. • Charging interest on delinquent accounts, can help
prompt your customer to want to pay your bills
before interest starts to accrue.
• You should disclose interest charges in your
purchase contracts or credit applications.

9. Use a credit application so your customer agrees to basic
terms up front (see Chapter 3).
Obtain a purchase order number or form from
your customer so your customer can’t refute at a later point and
time that he ordered the goods or services from your company.
Invoice promptly to reinforce that your customer ordered the
goods, you shipped them, and you expect payment for them.

10. Keep copies of delivery documents, if applicable, so you
can show that the ordered items were delivered.
Document changes to amounts due. Track any
adjustments to the amount your customer owes with credit and debit
memos.
Use change orders to document your customer’s authorization
for any modification of its orders.
Send a statement of account as a monthly reminder to your
customer that it owes you money.

11.  Purchase orders: Proving the order was placed
A purchase order (PO) documents that your customer ordered your
product or service.
 Invoices: Obtaining payment through effective
invoicing. Your invoice is the bill for the products or services
rendered by your company to your customer.
 Delivery receipts: Establishing proof the
product was received. Delivery receipts are provided by
carriers such as trucking companies that deliver your goods to your
customers.

12.  Credit and debit memos: Documenting changes
in the balance owed
 Change orders: Putting modification of the
agreement in writing. Change orders are important to
document price increases, changes in materials, services, or other
changes affecting price, and the balance due from the customer.
 Statements of account: Sending monthly
statements as a regular reminder to pay. Whether
your customer’s account includes only one invoice or hundreds of
invoices for the current billing cycle, the next document forwarded to
your customer as a reminder for payment should be a summary
statement of account.

13. • Credit memo - is
issued by you to
document products or
services that you
provided to your
customer but that
were not received or
were rejected or
returned.
• Debit memo – is
typically issued when
the customer fails to
pay an invoice or pays
less than the entire
amount that is due.

15. Creating an effective billing system
Maintaining precise records
Making sure your forms don’t conflict with each other
Keep key records, like customer checks
Sidestepping billing discrepancies by
putting everything in writing

16. If the customer has been turned over for
collection, the collection agencies make
demands for payment using their own
letters to pay the debt.
If a debtor files for bankruptcy and the
debt is being handled by the
bankruptcy court, you may be in
violation of the bankruptcy law if
you still send bills and notices to
the debtor.

17. Inputting data accurately
Using the correct forms
Respecting confidential and
sensitive data