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Billing Best Practices
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needed by the consolidator, and then send this file (over the Internet) to the con-
solidator, which then posts the information. Customers then access their invoices
in a summary format, which are clustered together for all of their suppliers, and
either accept or reject them for payment; if there is a problem, customers can
access greater levels of detail for each invoice, and usually access an e-mail
account that will be sent to the company’s customer service department.
The cost of this service varies considerably by consolidator, with some charg-
ing the customer, some the company, and some charging both. It is best to refer to
the fee schedule of each one to determine the precise amounts. The fees charged to
a company are not excessive, and should not get in the way of adopting this option.
The main problem with using a consolidator is that not all customers will
want to use the one to which the company prefers to send its invoicing informa-
tion, since they may have already set up payment plans with many of their other
suppliers through different consolidators. Accordingly, a company may find itself
issuing invoice files to a large number of consolidators, which presents additional
work for the person reformatting the invoice file.
The most common of these electronic invoicing options is bill posting on a
company’s own Web site, since it is the simplest of all options. However, with the
growing use of invoice consolidators by customers, the issuance of invoices
through this medium, in addition to their posting on a company-owned Web site,
is a reasonable alternative. These are not mutually exclusive options.
Cost: Installation time:

4–5 ISSUE SINGLE, SUMMARIZED INVOICES EACH PERIOD

Some companies make a business out of selling small quantities of products in
small batches, which necessitates a very large quantity of invoices. For example, a
company that sells nails in batches of an ounce per sale will issue 16 more invoices
than one that sells nails in batches of no less than one pound. If the cost of issuing
an invoice is as little as $1 (and it is usually much more), then the price at which the
nails were sold will probably be far less than the cost of issuing the associated
invoices. Clearly, companies that must issue enormous numbers of invoices in this
manner will find that their administrative costs are excessive.
A way out of this dilemma is to group all sales for a specified time period, such
as a month, and then issue a single invoice that covers all of the sales during that
period. This approach, which is used by W.W. Grainger for many of its customers,
is similar to the invoicing method used by credit card companies, which congregate
all sales for a full month and then issue a single billing. By using this best practice,
a company can eliminate a very large proportion of its total invoice volume.
There are some issues to consider before using this best practice. One is that
this approach is obviously most suitable for companies that issue large quantities of
low-dollar invoices. Conversely, it is not a reasonable approach if invoice volume is