Billing and collections : best practices

254 Pages·2005·2.535 MB·English

by  Steven M Bragg

TLFeBOOK
Billing and Collections
Best Practices

Billing and Collections
Best Practices
Steven M. Bragg
John Wiley & Sons, Inc.
This book is printed on acid-free paper.
Copyright ©2005 by John Wiley & Sons, Inc., Hoboken, New Jersey. All rights reserved.
Published simultaneously in Canada
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Library of Congress Cataloging-in-Publication Data:
Bragg, Steven M.
Billing and collections : best practices / Steven M. Bragg.
p. cm.
Includes index.
ISBN 0-471-70224-2 (cloth)
1. Collecting of accounts. I. Title.
HG3752.5.B73 2005
658.8'8—dc22
2004015545
Printed in the United States of America
10 9 8 7 6 5 4 3 2 1
Once again, to my wife Melissa. Thanks for minding the
house and kids while I hide in the study to write another book!
About the Author
Steven Bragg, CPA, CMA, CIA, CPIM, has been the chief financial officer or
controller of four companies, as well as a consulting manager at Ernst &
Young and auditor at Deloitte & Touche. He received a Master’s degree in finance
from Bentley College, an MBAfrom Babson College, and a Bachelor’s degree in
Economics from the University of Maine. He has been the two-time president of
the 10,000-member Colorado Mountain Club and is an avid alpine skier, mountain
biker, and rescue diver. Mr. Bragg resides in Centennial, Colorado. He is the
author of Advanced Accounting Systems(Institute of Internal Auditors, Inc., 1997),
and the following books published by John Wiley & Sons, Inc.:
Accounting and Finance for Your Small Business
Accounting Best Practices
Accounting Reference Desktop
Business Ratios and Formulas
Controller’s Guide to Planning and Controlling Operations
Controllership: The Work of the Managerial Accountant
Cost Accounting
Design and Maintenance of Accounting Manuals: ABlueprint for Running
an Effective and Efficient Department
Essentials of Payroll
Financial Analysis
GAAPImplementation Guide
Inventory Best Practices
Just-in-Time Accounting: How to Decrease Costs and Increase Efficiency
Outsourcing: AGuide to Selecting the Correct Business Unit, Negotiating
the Contract, Maintaining Control of the Process
Sales and Operations for Your Small Business
The Controller’s Function: The Work of the Managerial Accountant
The New CFO Financial Leadership Manual
vi
Contents
Preface ix
Chapter 1 Success or Failure with Best Practices 1
Chapter 2 Credit Policies,Procedures,and Systems 11
Chapter 3 Credit Granting Techniques 33
Chapter 4 Invoice Creation 59
Chapter 5 Invoice Delivery 77
Chapter 6 Cash Collection and Application 91
Chapter 7 Managing the Collection Department 101
Chapter 8 Collection Systems 127
Chapter 9 Collection Techniques 151
Chapter 10 Deduction Management 177
Chapter 11 Outsourcing Collections 189
Chapter 12 Billing and Collections Measurements 205
Appendix Summary of Best Practices 223
Glossary 233
Index 239
vii

Preface
This book contains more than 200 best practices related to every phase of a
company’s billing and collections activities: creating credit systems, granting
credit, creating and delivering invoices, applying cash receipts, managing the collec-
tions department, outsourcing collections work, and using a variety of collection
techniques. Furthermore, one needs to measure a company’s progress in achieving
best practices, so a comprehensive list of billing and collections measurements
are included in a separate chapter. Given the large number of best practices presented,
the Appendix provides a summary of them for you. If there are any concerns
about the meaning of any billing, credit, or collection terms, the Glossary contains
a dictionary of relevant terms. In short, this is the go-to source for billing and col-
lections improvements.
This book is designed for people in several parts of a company. The credit staff
can use the chapters related to credit policies, procedures, systems, and credit
granting techniques, while the accounting staff will find useful those chapters
covering invoice creation, invoice delivery, and cash application. In addition, the
collections staff has access to several chapters covering collection systems, out-
sourcing, management, and techniques.
This book is intended to be a buffet table of ideas from which one can sample.
There is no clear set of billing and collection best practices recommended for all
companies, all the time. Instead, given the wide array of industry-specific problems,
one should skim through the book and select only those best practices resulting in
the most obvious improvements. The Appendix, which summarizes all of the best
practices, is a good place to conduct this review. However, a company’s business
plan will likely change over time, so it is worthwhile to refer back to this book
occasionally to see what other best practices may have become applicable as a
result of those changes.
Finally, one does not install a best practice merely by ordering that it be done.
On the contrary, there is a plethora of ways in which a best practices implementa-
tion can fail. Read Chapter 1, Success or Failure with Best Practices, to learn
what factors will affect a best practices implementation and how you can increase
your odds of success.
ix