Improper billing is a common excuse used by non paying clients. The non-paying customer may try to delay payment of 90% of the balance owned because of an alleged error in 10% of the billing.
Trying to reconcile billing and validating a balance owed can take time, Time you may feel you are not be able to devote. It may involve documents you may no longer have, a change in personnel or a change in billing software. A billing partner who left the firm may refuse to cooperate to pursue his client for monies owed you.
Successfully reconciling and validating the balance will not guarantee payment. You can bet that the customer looking for excuses not to pay will question the other 90% of the bill and refuse to make payment. The doubting Thomas will carry the allegation of improper billing as a defense into legal debt collection proceedings.
Billing errors can be minimized and/or prevented by applying the audit principle of Segregation of Duties. Segregation of Duties, also known as separation of duties, is designed to minimize errors and fraud.
Businesses should maintain separate and distinct departments for billing and collection. The collection department would be in a position to review any billing for irregularity and repair any inconsistencies or mistakes with the assistance of billing.
Many small business owners have a star employee. This “employee” may single handedly handle most of your billing functions. The star can take information from the contract, create the invoices, send statements, run accounts receivable aging, follow up and call customers on the aged receivables. When payments come in, this employee is able to apply payment(s) to invoices and prepare bank deposit(s).
Ideally the star employee that does it all should not handle billing, collection and application of cash receipts. Any errors or omissions which have a direct impact on the financial success of your company may be unrecognized. Still, because of an increase in costs for additional personnel, strict segregation of duties may not be possible for the small business owner. If strict separation of duties is not possible, there must be someone monitoring the employee(s) for fraud or errors in billing, collections of accounts receivable, recording of receipts, and deposits of money.
Although detrimental to your business and cash flow, billing errors are usually not fatal. There is hope. If you can prove goods were sold and delivered and/or services rendered, you can sue for the value of the goods or services. Make sure that your debt collection attorney is aware that billing errors had occurred or are alleged. A defense of improper billing, if anticipated, can be handled offensively and, if legal debt collection services are needed, a cause of action to recover for the value of the services may be included where circumstances allow.
If you need help getting paid contact FFGN. Since the practice is devoted exclusively to the collection of bad debt, we can anticipate defenses to non-payment. We have the experience that pays…
