This document discusses establishing effective billing practices to avoid collection issues. It covers getting prompt payment, keeping billing organized, training employees on procedures, monitoring customer payment habits, and escalating responses for late and delinquent payments. When customers fall behind on payments, the document advises creating urgency, using frequent reminders, and establishing a thorough paper trail of all communication and documentation regarding amounts owed.

2. Chapter 4
Establishing Good Billing Practices
to Avoid Collection Headaches
In this chapter:
•Getting prompt payment through effective billing practices
•Keeping your billing practices organized
•Training employees on billing procedures

3. Accounting and Billing operation
1.
Components of a Well-Run
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.

4. 2.
Is a visual guide of customers that are not paying
all of their bills on time. It contains the following:

6. 3. Interest charges for late payments
• 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.

7. Setting Up an Effective Billing System
An effective billing system requires the following:

8. Setting Up an Effective Billing System
 Purchase orders: Providing the order was placed
 Invoices: Obtaining payment through effective invoicing
 Delivery receipts: Establishing proof the product was
received
 Credit and debit memos: Documenting changes in the
balance owed
 Change orders: Putting modification of the agreement in
writing
 Statement of account: Sending monthly statements as a
regular reminder to pay

9. Setting Up an Effective Billing System
Purchase Orders are documents that your
customer ordered your product or service.
Invoices are the bill for the product or services
rendered by your company to your customer.
Delivery receipts are provided by carriers such
as trucking companies that deliver your goods
to your customers.

10. Credit & Debit Memos
• 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.

11. Credit memo Debit memo

12. Change Orders
Change orders are
important to
document price
increases, changes
in materials,
services or other
changes affecting
price and the
balances due from
the customers.

13. Statements of Account
• A customer’s statement of account is a
running ledger of the customers credit
transactions, including all payments,
payments, debits and credits.
• It is a summary of your transactions with your
customers over the course of billing period
(usually in 30 days).

14. “How can I pay you, when you haven’t
even billed me yet?”
“I never pay without a bill”
“I need something in writing”

15. Keeping Your Bills Accurate
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. Getting Bad Accounts Off the Books:
You Gotta Know When to Fold ‘Em
• 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. Training Your Staff in Billing Matters
Inputting data accurately
Using the correct forms
Respecting confidential and sensitive data

19. Chapter 5
Spotting and Reacting to
Changes in Habit
In this chapter:
•Setting controls to maintain cash flow
•Avoiding payment slowdowns
•Dealing with customers’ excuses for slow payment
•Handling changes in customers’ payment behavior
•Tracking down elusive customers

20. General Controls for Keeping Your
Cash Flow Steady
Be aware of slowing payments
Be ready to respond to customers bad habits
Be considerate, yet firm
Be prepared to reduce a line of credit, require
(COD) cash on credit or cut off deliveries or
services
Be honest in your
communications

21. Tailoring Your Strategy: A Short Leash
for New Customers
A. Setting tighter controls for newer customers
 Put the customer on a short leash, such as a 15-day watch
list, so you detect a slowdown in payments almost
immediately.
 Be ready to turn off the credit faucet: No credit if no
payment.
 Hold up further deliveries of your goods or services until
the customer pay his late invoices.
 Get additional assurance of payment, such as liens,
guarantees, and promissory notes.

22. Tailoring Your Strategy: A Short Leash
for New Customers (continued)
B. Helping out timely payers
 Extending their payment terms ( for example , payments
due in 45 days instead of 30).
 Forgiving some service charges on the account
 Offering a discount for early payment

23. Spotting Trends and Patterns of Payment
Keeping an eye (and ear) on your customer
Monitoring industry trends and bracing for
slowdowns
Speeding up slow payers
• Starting with a letter
• Following up with a phone call
Reacting to customers’ excuses, bad habits, and
broken promises

24. Spotting Dubious Changes
Changes in ownership of a client business
Changes of address or phone number
Changes in order volume
• A decline in orders often precedes a decline in payment
diligence.
• An unexpected increase in orders
Changes in financial situation
Changes in customer attitude
Changes your customer’s understanding of
purchase or credit terms

25. Dealing with Elusive Customer
1) Breaking free from voice mail jail
2) Detouring around the disconnected phone
 Showing up on the debtor’s doorstep
 E-mailing
 Faxing
 Texting
Elusion is a definite red flag. Put the customer at the
top of your list for monitoring payments and
exercise extreme caution when considering any
further extensions of credit.

26. Dealing with Elusive Customer

28. Chapter 7
When Your Late-Paying
Customer Turns into Your Debtor
In this chapter:
•Creating a sense of urgency for payments
•Using frequent payment reminders effectively
•Establishing a good paper trail

29. Creating an Atmosphere of Urgency
Interest and penalties
Attention getting words and “big red letters”
Frequent reminders
Multiple of modes of contact
Making a phone call

30. Communicating Effective
Reminders to Pay
Writing effective collection letters
• Keep it short
• Use simple words, short sentences and paragraphs
• Customize the letter
• Demand payment by a specific date
Special concerns for consumer debtors
Still not paid? Escalating your approach
Customizing your notification approach
Don’t forget the power of a phone call

31. Documenting the File: Having Good
Notes When You Need Them
Your customer’s entire credit file
Notes of phone calls made or received, along with
dates and responses
Notes made by employees of your company
Copies of all follow-up statements
Copies of all demand letters and follow up
correspondence

32. Documenting the File: Having Good
Notes When You Need Them
1) The paper trail: How good records help you both
in and out of court
2) Anticipating reactions: Playing devil’s advocate
3) Pursuing written admissions of the debt