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Compensation Strategies

Billing Best Practices: Ensuring Timeliness & Accuracy for Improved Cash Flow

A critical and fundamental aspect of operating a business involves paying attention to various critical aspects, one of which is often overlooked: billing. It’s common for businesses to establish a system of processes and then consider occasional billing mistakes as a normal part of their operations’ “cost of doing business.”

However, to keep your organization financially fit, it’s imperative to regularly check in on your billing processes to ensure they’re as efficient, effective, and accurate as possible. Learn more with these billing best practices.

Billing Best Practices

Resolve Mistakes Quickly
Many billing problems originate from a gradual deterioration in the quality of products or services. You may be giving customers an excuse not to pay their bills if products are showing up late or damaged — or not at all. The same goes for services that aren’t provided in a timely, satisfactory, or professional manner.

When it comes to billing processes, common mistakes include invoicing a customer for an incorrect amount or failing to apply promised discounts or special offers. Be sure to listen to customer complaints and track errors so you can identify trends and implement effective solutions.

In addition, regularly verify account information to make sure invoices and statements are accurate and going to the right people. Set clear standards and expectations with customers — both verbally and in writing — about your policies regarding pricing, payment terms, credit, and delivery times.

On the flip side, work closely with your managers and supervisors to ensure employees are well-trained to enforce billing policies. Staff members should prioritize quick resolutions to billing mistakes and disputes. They also should ask customers to pay any portion of a bill not in question. Once the matter is resolved, the customer should be politely asked to pay off the remainder immediately.

Tighten Up Timeliness
For invoice-based businesses, regularly sending out bills late can negatively impact collections. Familiarize yourself with current industry norms before setting payment schedules.

Traditionally, such schedules tend to be based on 30-, 45- or 60-day cycles. But times may have changed — particularly now that so much billing is done electronically. What’s more, many companies permit their most important or largest customers to set their own customized payment schedules. If this is the case for you, be sure to adjust your cash flow expectations and projections to recognize these variances.

As mentioned, today’s technology is driving how most businesses handle billing. An automated system can generate invoices when work is complete, flag problem accounts, and generate useful financial reports.

If you haven’t already, consider sending invoices electronically and enabling customers to pay online. Doing so can greatly speed up payment. Like any software, however, you’ll need to reassess it from time to time to determine whether you need an upgrade.

Control What You Can
There are so many aspects to doing business that are unpredictable — the global, national, and local economies; customer tastes and demands; and disruptive competitors. That’s why it’s so important for business owners to be proactive about the things they can control. Our firm can help you assess the efficacy of your billing processes and identify ways to improve cash flow. Contact us.

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