10 Effective Practices for Accounts Receivable Invoice Billing

10 Effective Practices for Accounts Receivable Invoice Billing
10 Effective Practices for Accounts Receivable Invoice Billing

Most companies forget the fact that only accurate and precise billing can ensure smooth cash at all times. Faulty and inaccurate billing can lead to delayed receipt of cash, the customer charged with payment for wrong amounts and other such instances that have the potential to lead to disputes.

This is precisely the reason why companies need to have a clear invoicing policy. Invoice is the bill sent to customers detailing items/service sold, payments due, payment terms and other billing details. This needs to be sent, in order for the company to receive payment for the goods and services delivered to the customers. The detailing in the invoice and its design plays a crucial role in reducing billing disputes. This becomes especially important if the organization is a complex one, with branches in multiple locations. In this case, the invoice needs to be consistent across locations and the design needs to be similar so that capturing, and recording the information in the master database becomes easy. An experienced Accounts Receivable Outsourcing Services expert can provide you with that knowledge and expertise to ensure that your AR collections remain consistent and cash flow remains smooth.

10 Effective Practices for Accounts Receivable Invoice Billing

Listed below are some of the ways in which you could create an effective invoice and an invoicing process that speeds up your cash flow.

  1. Clarity of Information:

    It is not only important that you concentrate on providing space for the quantity and price of the goods/services provided, you need to have other information clearly highlighted on the invoice. This information would include contact details and sale description. In the case of contact details, ensure that your contact details are given in the invoice along with the customer’s contact details. Most companies assume that the customer would know how to contact them. This might not be the case. Providing clear information with address and phone numbers early on can bring down billing enquiries. The payments options should also be mentioned clearly. For instance, if you do not take mobile wallet payments, state the same in the invoice. The description of the sale is also necessary. This would ensure that the customer is billed only for the products/services he or she has availed.

  2. Completeness of Information:

    Whatever information you put on the invoice, make sure that it is complete in all respects. For instance, companies often fail to print their email address along with the mailing address and phone numbers on the invoice. Customers often prefer to write to companies through email regarding issues with products, payment, or billing. The sales description also needs to be complete. Abbreviations can be avoided on invoices. For example, a healthcare firm often describes their sale as ‘blood test’ or ‘consultation’. If words such as ‘blood test for thyroid’ or ‘orthopedic consultation’ were included, ambiguities would be less. This is the reason why itemized billing might be essential for an effective invoice.

  3. Unambiguous Information:

    Payment terms need to be stated clearly in the invoice. Unclear payment terms would mean higher billing enquiries and delayed payments. Ensure that the payment amount, payment options, and the due date are highlighted in the invoice such that the customer does not have to search for the same. You could also mention the discount offered on early payment in the invoice.

  4. Proper Numbering:

    A good numbering system for the invoices would help track them easily. Usually a combination of words and numbers would be the right way to number invoices. For instance, a financial services firm would number invoices based on retail and corporate customers wherein retail customer invoices would start with ‘RET’ and corporate customer invoice numbers would begin with ‘COR’. This numbering style would help segregate certain important invoices from others.

  5. Continuous Review:

    Your invoices should be free of grammatical errors, wrong calculations, and currency issues. This becomes even more critical if you make sales in multiple currencies. Invoices need to be thoroughly checked before they are dispatched to the customer. If errors are not corrected before dispatch, there are chances of the invoice being returned. Time and efforts might need to be spent on correcting the same, not to mention the possible delay in payments.

  6. Easily Trackable:

    Invoices should be designed and information should be captured in such a way that they are easy to track. Every invoice should have a unique number and the details of the invoice should be captured against this number. They should be put up in a central repository that can be accessed by the right personnel from any location. When invoices are easy to track, it becomes simple to update any changes that need to be made to them.

  7. Ensure Proper Dispatch:

    Postal dispatch of invoices might lead to delays. The best way is to dispatch the invoice through both postal mail and email. This way the customer cannot miss the invoice.

  8. Follow Up is the Key:

    After the dispatch, the invoices need to be followed up until it reaches the customer. An acknowledgement of receipt of invoice must be obtained from the customer and the same can be recorded for future reference.

  9. Using Invoicing Software or Online Invoicing:

    In order to create a good invoice, relevant invoice templates are important. Instead of downloading free templates from the internet, you could invest in good invoicing software that can create invoices quickly and efficiently. Software programs help ensure that all the required details are captured, make invoices traceable, and make the invoice relevant to your business. Invoice customization is also available. Online invoicing could also be considered wherein you send digital invoices to customers. This way you would save on cost and time involved in preparing physical invoices.

  10. Invoice as Brand Promotion Tool:

    Invoices are one of the faces of your business. An invoice could be used as a window to display your brand. Visually impressive invoices can aid in brand retention. Display your logo and other details prominently on the invoice. You could also use invoices to mention other products and services that you offer, thus helping you cross sell. However, ensure that the invoice does not become cluttered because of these details. The best would be to mention such details behind the invoice or at the end of the invoice.

Even though billing might be a basic function, producing accurate invoices and bills and establishing an efficient billing process would go a long way in lowering the number of  billing disputes, facilitating quicker receipts of cash from customers and reducing the number of bad debts in your books. Taking the help of a Finance and Accounting BPO Outsourcing Services expert would help you obtain the right assistance in ensuring that your AR invoice billing remains on track.

Also Read Related Articles:

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Last Updated on August 20, 2020


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