Controls for Billing (#11)

In this episode, we discuss the controls associated with billing. The key points made in the podcast are divided into three parts, which are for manual systems, computerized systems, and general controls.

The controls related to a manual billing system are:

  • Verify prices being billed against a standard price list

  • Proofread larger invoices prior to mailing, to minimize errors

  • Have the originating salesperson verify invoices, to spot errors

  • Verify any unusual payment terms

  • Verify the applicable sales taxes being charged

  • Stamp each envelope with “address correction requested”

The controls related to a computerized billing system are:

  • Print and review the invoice preview report to ensure that all items to be billed are accurate

  • Reduce access to the billing software, to minimize the risk of fraudulent billings

The controls relating to all types of billing systems are:

  • Segregate the billing and collection duties, to keep anyone from falsely issuing a billing and then collecting the related funds

  • Compare contract prices to what is being used for the prices on the most recent invoices

  • Monitor customer complaints regarding invoices

  • Issue month-end statements to customers, to see if they can spot any errors

  • Compare the quantities shipped to the quantities invoiced

  • Clean up the invoice format to make it easier for customers to read

  • When entering an invoice into a customer’s online payment system, print the confirmation page to verify that it was entered

  • Segregate credit memo creation from the cash receipts function

  • Require approvals for the creation of larger credit memos

  • Charge credit memos against salesperson commissions, so that they have an incentive to investigate the memos

  • Audit a selection of credit memos

Related Courses

Accounting Controls Guidebook
Accounting Information Systems
Credit and Collections Guidebook