Page 96 - Accounting Best Practices

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Summary
TOTAL IMPACT OF BEST PRACTICES 85
ON THE BILLINGS FUNCTION
This section describes a set of best practices that, when integrated into the
billings function, results in significant efficiency improvements. The best prac-
tices presented here are a subset of the complete list presented earlier in this
chapter, in Exhibit 4.1. This listing, as diagrammed in Exhibit 4.3, eliminates
several best practices that are mutually exclusive. For example, if a company
uses a computerized shipping log to create invoices, there is no need to use
another best practice, such as tracking variances between invoices created and
the paper-based shipping log. When these types of conflicts arise, only the most
advanced best practice is assumed to be used. As a result, the best practices
shown in Exhibit 4.3 note that a company should always directly link its ship-
ping dock with the accounting database by having all shipments automatically
invoiced as soon as the shipping staff puts a delivery on an outbound truck. The
printed invoice should use a minimum number of copies, avoiding several
downstream steps to file them. The invoicing function should also avoid the use
of month-end statements. Finally, a company has a variety of invoice-delivery
options to choose from, ranging from EDI transmissions to point-of-delivery
invoicing, or even the complete elimination of invoices by using direct cash
withdrawals from customer bank accounts. The exact invoicing method or com-
bination of methods chosen will depend upon the special circumstances and
requirements of each company.
If some of the best practices noted in Exhibit 4.3 cannot be completed for
any reason, some lesser combination of best practices will still result in efficiency
improvements, though not to as great a degree as would be possible if the entire
set of improvements were implemented.

SUMMARY
This chapter focused on improving the speed and accuracy of invoice prepara-
tion and delivery. There are several ways to achieve these goals. One is to
increase the accuracy of invoicing information reaching the accounting depart-
ment, which calls for changes in the shipping department, as well as the
method for transferring shipping information to the accounting department.
Another set of methods involve how invoices are transmitted to customers.
New technologies allow one to do so electronically or at the point of delivery,
so that customers receive more accurate invoices more quickly than ever
before. Finally, invoices can be completely eliminated in a limited number of
cases, resulting in direct cash transfers from customer bank accounts to the
company. When used together, these best practices result in a significant
improvement in the efficiency of the billing function.