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Billing and collections : best practices PDF

254 Pages·2005·2.535 MB·English
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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 No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA01923, 978-750-8400, fax 978-750-4470, or on the Web atwww.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, 201-748-6011, fax 201-748-6008. Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages. For general information on our other products and services, or technical support, please contact our Customer Care Department within the United States at 800-762-2974, outside the United States at 317-572-3993 or fax 317-572-4002. Wiley also publishes its books in a variety of electronic formats. Some content that appears in print may not be available in electronic books. For more information about Wiley products, visit our Web site at www.wiley.com. 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

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