How strategic is your billing process? Is it designed to increase speed-to-cash, reduce errors and lower bad debt? The billing process is seen as a rather utilitarian function and is often overlooked and under-valued as a strategy.
Typically billing is seen as a very basic and routine process of identifying what should be billed and to whom. However, the apparent simplicity can be deceptive, and many mid-market and enterprise-level companies struggle with it. Particularly when a company is fragmented with multiple divisions and offices or growing rapidly, the challenges are numerous. These can include:
- How can we make the billing process consistent in terms of look, feel and information?
- Is the master data for the customer accurate?
- Are all charges correctly itemised and up to date?
- Can recurring charges be set-up automatically or are daily reminders required?
- How can billing cycles match up with client cash flow cycles and process to avoid any unnecessary repetitive follow up and effort?
Here are 10 best practices to improve your billing process.
1. Payment Amount & Due Date Must Stand Out
The customer must be able to quickly scan the invoice and see the amount due and when it is due at a glance. These two items are key to prompt and accurate payment and should be given prominence.
2. Itemise the Invoice Items
Make it easy for customers to see exactly what they are paying for. Include a breakdown of all products or services rendered. Itemised invoices reduce misinterpretation and miscommunication.
3. Check & Check Again
Proof your invoice for typos, currency errors and computational mistakes. In many cases, invoices are sent to collections because the client won’t pay due to an invoicing error. This drives up A/R costs, slows the order-to-cash cycle and is a drain on resources.
4. Offer Diverse, Convenient Payment Options
In addition to payment by cheque, consider offering your customers multiple payment methods including credit card or bank transfer. More payment options improve the likelihood of payment.
5. Encourage Early Payment
Early payment discount schemes can help speed up payment; however, these should be highly visible and easily understandable. Customers may miscalculate or make errors when common discount terms are expressed as “2%/10 Net 30”. Remove any ambiguity by stating the exact amount of the cash discount and the cut-off date to claim this discount.
6. The Contact is Key
The invoice must be sent to the right person, and this isn’t necessarily the project’s point person. Once the contract is signed, ask for the name and contact details of the Accounts Payable person. Be sure to include a telephone number or email contact for any billing disputes, which will ease the demand on collections. These contact details should be checked and verified yearly as a minimum.
7. The Invoice as a Marketing Touchpoint
Invoices should be viewed as customer communications tool. Visually pleasing, the invoice reinforces your brand. At the very least, logo, strapline and contact details should all be easy to spot. The invoice may also be used to highlight promotions or any early contract renewal offers, but not at the risk of extraneous clutter.
8. Make it Trackable & Transparent
Unique invoice numbers, digitalisation of the A/R process and a single-view accounting platform makes it much easier to record, track and follow-up on payments.
9. Timing is Everything
Invoices should be sent out as per the contract schedule or immediately upon completion of the project. There should be no delays. Timely invoices drive timely payments.
10. Follow Up On Larger Invoices
For large balances and key accounts a courtesy follow-up call to confirm the bill has been received helps ensure prompt payment.
Finally, the 11th rule is to train your staff. Billing is frequently an entry-level position, and without proper training error rates increase, invoices can be misfiled or sent to the wrong people. The best way to support efficient billing is to ensure that all team members have access to written policy guidelines and are trained in the correct procedures. Equally as important, your billing staff must be customer-centric, as they often deal with complaints and dispute resolutions. Your employees need to get the right balance between stating policy and providing the right level of customer experience and satisfaction.
If your company is considering world-class Order-to-Cash outsourcing, supported by outstanding customer service, talk to us to learn more or contact us for a free assessment of your Order-to-Cash processes.