Page 82 - Accounting Best Practices

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4–4 Issue Electronic Invoices through the Internet
There are several problems with Internet invoicing that one must be aware
of. First, some customers change their e-mail addresses with some regularity, so
that there is a chance that invoices will be sent to an old address, and therefore
never accessed. Also, there is some risk that customers will accidentally erase an
incoming electronic invoice without reviewing it. Furthermore, this approach
leaves no paper record of the invoice at the company, just a computer record; this
is a problem for those organizations where the collections effort is primarily
based on paper files, rather than ready access to the accounting database.
Another issue is creating the software that will in turn create an invoice
(either text-based or using the industry-standard Portable Document Format
(PDF) promulgated by Adobe Systems) and then send it to an e-mail address.
This can be a significant programming effort if done internally, and runs the addi-
tional risk of being wiped out if the attached packaged accounting software is
upgraded, which may destroy or alter some of the software linkages to which the
custom software is attached. Fortunately, a number of accounting software
providers are now adding this feature to their accounting systems, so that internal
programming can be avoided.
Some of the problems with e-mailed invoices can be addressed through the
careful analysis of which customers reliably pay their invoices by this means and
(more importantly) which do not. If there is a consistent problem with payment
by some customers, they can be flagged in the accounting database and a tradi-
tional paper-based invoice can be created for them. Alternatively, the same
invoices can be continually reissued every week or two by e-mail. This is a zero-
cost option, since there are no mailing or printing costs. When using this approach,
the entire file of unpaid invoices can be reissued electronically to customers.
However, to avoid multiple payments for the same invoices, it may be useful to
alter the format of these secondary issuances, so that they are clearly labeled as
reminder invoices. An alternative format is to cluster all unpaid invoices for each
customer into an electronic statement of unpaid invoices, which can be issued at
regular intervals.
The use of direct e-mails to customers is particularly enticing, not from an
accounting perspective, but from a marketing view. A complete list of customer
e-mail addresses allows one to send sales, marketing, and customer service infor-
mation to a company’s entire mailing list at the touch of a button, and with no
associated distribution cost whatsoever.
A final variation on the use of electronic invoices through the Internet is the
use of a consolidator. This is an entity that maintains a Web site that allows a
company’s customers to access not only their billings, but those of their other
suppliers, too. This approach has the distinct advantage of allowing customers to
pay a number of different bills at the same time, without switching to a number of
different Web sites in order to do so. Examples of these consolidators are Check-
free, Speedpay, and Microvault.
A company that wishes to have its invoices posted on a consolidator Web site
must create a data file that reformats the invoice information into the format