Dave Brockman of Brockman, Coats, Gedelian & Co., an Akron-based accounting and consulting firm, theorizes that most businesses deal with three kinds of customers: those who can pay but are looking for any excuse not to; those who want to pay but delay doing so because of a billing discrepancy; and those who want to pay but can’t.
Although there are no laws that address how an invoice should be prepared, he and others believe an efficient, professional billing process can reduce the collection headaches and legal wrangling.
“Without billing discrepancies, good customers will quickly approve and pay your bill, while poor-paying customers usually pay creditors who appear more organized and thorough,” says Brockman.
Brockman and two area lawyers list the hallmarks of good billing below.
1. Send an acknowledgement of each order received that spells out terms of payment.
“Sometimes a company will put on its invoice terms that may not have been discussed up front when the product was ordered,” says Roger Stevenson, a partner at Roetzel & Andress, a full-service law firm headquartered in Akron.
The acknowledgement should clearly spell out the terms of payment, particularly the due date and any late charges that will be levied.
2. Require the customer to sign and return a copy of the acknowledgement or to acknowledge it in writing.
Marc Merklin, chairman of the commercial law practice group at Brouse & McDowell, a full-service business law firm headquartered in Akron, says a fair number of companies end up in disputes because the terms set forth in the fine print of the buyer’s purchase order conflict with those set forth in the fine print of the seller’s confirmation. Adding this step to the sales process helps prevent such problems from arising.
3. Itemize the products/services for which the customer is being billed. Stevenson uses the bills Roetzel & Andress sends to clients as an example.
“Because we’re basically selling time and service, most clients want — and most lawyers produce — fairly itemized descriptions of what they did, who did it and how much time it took,” he says.
Merklin points out that bills should be worded in such a way that anyone can understand them.
“A bill that’s just a series of computer codes is not going to mean anything to the person reading it,” he says.
Brockman suggests listing customers’ purchase order numbers, matching the work order, contract or packing slip and specifying the quantities ordered, shipped and back-ordered.
4. Include a telephone number the customer can call if there are questions. Brockman says accounts receivable personnel should be trained to field questions.
“Make sure your accounting department recognizes their customer service responsibilities,” he says. “They can have as much impact on satisfaction levels as your main salesperson.”
5. Send bills promptly, as soon after goods are shipped or services rendered as possible. Wait too long, and the buyer may forget the transaction and be surprised by the bill.
“If you have surprises, you’re going to have problems,” Stevenson says. How to reach: Brockman, Coats, Gedelian & Co., (330) 864-6661; Brouse & McDowell, (330) 535-5711; Roetzel & Andress, (330) 376-2700
Staying on track
Many companies lose track of late payments from customers simply because they don’t track the payment of bills. If a bill is due on the 30th day after delivery of goods or rendering of services, someone should check to make sure payment is in fact received by that day, says Roger Stevenson, a partner at Roetzel & Andress.
Appointing someone to make a phone call to the customer soon after the payment due date can head off future late payment or nonpayment problems, he says.
In addition, “improving your billing process can eliminate excuses for customers who are looking for them,” says Dave Brockman of Brockman, Coats, Gedelian & Co.
