The Case for Billing from Multiple Locations
The controller of a larger organization may be tempted to centralize the billing function, since a small group of functional experts can be relied upon to churn out invoices in large volumes. The trouble is that more complex billings do not necessarily translate well into a centralized billing environment. This is a particular issue for long-term projects, where the person issuing an invoice must be aware of the remaining funding on the project, as well as any other restrictions placed on billing by customers.
Further, some customers require attachments to invoices, such as the authorizing purchase order and any subsequent change orders. The result in these cases is invoices that require a considerable amount of knowledge to prepare.
Billing from Multiple Locations
When confronted by these more complex invoicing issues, it may make more sense to abandon centralized billing and instead push it down to the local level. The local preparer of an invoice may do so manually or just with an electronic spreadsheet (which may be necessary for extremely complex invoices). If so, the local preparer must be assigned an invoice number by the central billing group. The local preparer then issues the invoice to the customer and sends a copy to central billing, which inputs a simplified version of the invoice into the corporate computer system and retains its copy of the original invoice.
Problems with Billing from Multiple Locations
While localized billing may be necessary, it suffers from the following problems:
- Invoice numbers. Batches of invoice numbers must be assigned to local invoice preparers and monitored to ensure that they are used.
- Customer-assigned tracking numbers. A customer may assign a tracking number to an invoice, which the company must reference during collection calls. A field in the accounting database should be reserved for this tracking number, so that it can be stored and readily accessed as needed.
- Invoicing errors. Complex invoices are inherently more difficult to prepare, and so may contain errors that require multiple iterations to correct. This can be a real problem if the subsequent changes must all be updated in the central billing system. There is no easy way to resolve this issue.
- Preparation speed. Complex invoices take time to prepare, especially when done manually. This can result in a significant delay in the month-end closing process. The only resolution to this issue is to encourage the billing staff to begin work on invoices as soon as possible.
An alternative solution is to grant local invoicing staff access to the corporate billing system, so that they can prepare invoices in the primary system. However, the inherent complexity of the invoices involved may not make this a viable option, given the simplified invoice templates that most billing software uses.