Accounts receivable is a term used in businesses where companies allow customers to buy goods or services on credit. If customers only pay by cash or check, then accounts receivable is a very basic type of account that changes easily as payments are made. However, with credit, companies store the money that is owed them but not yet repaid in the account, which makes it an important part of the company earnings strategy. Businesses need plans regarding how they Accounts Receivable Billing Process, and how quickly they want to move the debt.
AR Accounts Receivable Billing Process
If your company offers goods or services without prepayment, the unpaid money is classified as receivables (AR). The process of sending invoices, collecting payments, and tracking unpaid balances is an AR invoicing system your company is likely already following.
The following invoicing process covers three tasks in the invoice creation process, including gathering the information needed to create an invoice, create an invoice, and issue it to the customer.
View billing information (billing clerk)
- Access to daily logs of shipments on computer systems.
- Scan the details of each shipment to make sure it’s ready for billing. If so, mark the note as payment.
- Open the invoices module and open the preview screen for any future invoices that need to be printed.
- Make sure all prices have been agreed upon by the ordering staff. If not, compare the prices provided with the official company price list and whether any deviations from this list are approved.
- Add flat rate shipping charges unless the order is marked as prepaid or is picked up by the customer.
- Check that the customer’s VAT code is correct and correct it if necessary.
Print invoice batch (accounting clerk)
- Select the option in the billing software to print all marked invoices.
- Put the official company invoice form on the printer.
- Perform a test print to make sure that the invoice form is properly placed on the printer.
- Print the entire set of invoices and check that they are printed correctly.
Creating and sending invoices (accounting clerk)
- If the invoice is multiple copies, make copies of them and keep the specified copies.
- Fill in the customer’s version of the invoice in an envelope.
- Print Address Correction Required on the invoice envelope.
- Send an invoice envelope to send to the post office.
Copy of invoice file (accounting clerk)
Optionally, you can send a saved copy of the invoice with either the invoice number or the customer name.
Don’t forget to
- Investigating Billing Issues: If a customer doesn’t pay the bill, the company needs to investigate the matter. Most billing problems are not caused by a customer’s refusal to pay the bill, but by a specific problem. The customer may not have received the promised service or may have been promised a payment term that was longer than the correct one.
- Sometimes an invoice does not have the required information or an order was not processed correctly. In this case, the company will need to fix the problem to collect the bill.
- Due Collections Steps: If a customer refuses to pay, the company must decide how to handle the late payment. Most companies need to follow some clear steps.
- The first step might be a phone call as the deadline approaches to make sure the customer pays. After the deadline, most companies will issue another invoice and place a second call as a warning. The company may also decide to take legal action against customers, especially those with larger debts.
Most importantly, identify a solution for managing your accounts receivable that allows you to automate invoicing, tracking and reporting so approaching issues are quickly identified and resolved. Software Services manage the billing accounts receivable, so more of your time is available for leading and managing the business you do best.
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