Project managers create planning statements when they have made decisions on the development of a specific project plan or what they want to accomplish. A planning statement is a…continue reading
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What Is a Billing Statement?
Often, a billing statement or statement of account is associated with credit card accounts. In a report by Experian, 829 billion US dollars is the outstanding consumer credit debt in the US. With a billing statement, banks can communicate to a cardholder regarding the transactions they made, their minimum monthly payment, the interest charged for the month, any fees added to the balance by the credit user, and other vital details. Each billing statement is sent on a monthly basis. More so, credit card users can receive their billing statement by mail or online.
On the other hand, a billing statement is also a document used in various organizations—like hospitals, universities, service-oriented businesses, and other businesses that require payment from their clients—in their billing processes. In this process, billing is described as generating invoices for customers on a recurring or one-time basis, depending on what pricing plan that a client has chosen. At one point in the process, the clients will be given a billing statement to remind them of their payment responsibilities.
According to the Credit Cards, there were 191 million American adults who are a credit cardholder as of January 2020.
The outstanding consumer credit card debt has reached 829 billion US dollars based on a report published by Experian.
Based on an article by the Etactics, 80% of all medical bills contain at least an error. And it costs hospitals 68 billion US dollars every year.
Why Is a Billing Statement Important?
A billing statement plays an important role in the billing process. As one of the most crucial aspects of running a business, the latter should be as effective as it gets. Otherwise, the cash flow will dry up and the business can no longer operate. This process is consists of three stages and these are invoicing, sending statements, and collecting payments. And for it to be successful, all three stages should be completed and must be done respectively.
Invoicing is the initial stage in which sales orders or estimates become an actual charge on top of the complete parts, labor, sales tax, shipping, and other applicable changes. This will give customers an idea about the final price they need to pay. The second stage is the sending of statements. It provides customers with a reminder of the due date, how much the bill is, and the incurred interest of the billing cycle. Lastly, the collection of payments. Unlike invoicing and statements, this part does not need a form. It is simply the act of requesting payment arrangements that work for both the customers and your business.
Elements of a Billing Statement
Now that you already know that billing statements are a part of the billing process, the next thing you should learn is its elements. Every billing statement is different depending on what pricing arrangement a client has chosen. Because of that, a statement must be specifically made for that business transaction. However, some businesses created standardized billing statements solely for their payment transactions. If you want to make one, here is a list of all elements this document should have. Continue reading below.
How Do You Improve Your Billing Process?
We can all agree that the term “billing” is familiar as we use it, if not every day, most of the time. But if you are managing a business, it is imperative to go in-depth into a more technical understanding of the concept. Because a billing statement is a crucial part of a business’s success, it can be tedious. That is why creating a working document to smoothen the billing process is efficient. Since we already discussed the different elements of a billing statement above, the list below will not be about how to create one. Instead, these are tips on how to improve your billing process:
Tip 1: Set Clear Payment Terms
If you set unambiguous payment terms on your statement, it increases the likelihood of receiving fast payments. What is a payment term? It indicates the period before payment for an invoice is due. Furthermore, the payment term is usually present in your invoice. In best practice, it should be determined before doing a new transaction with a customer. As a business, it is vital to understand how payment terms impact cash flow. By indicating the payment terms, customers are informed of your expectations when payment is due. Customers will be more mindful of the pending deadline with a definite date in mind. To further encourage your clients to pay on time, use additional conditions like late payment fees or discounts when early payment is made.
Tip 2: Automation
Using simple tools or software can automate most parts of the billing process. This includes invoice generation, overdue invoice reminders, automated payments for fees, billing statements, and so much more. You can use invoice templates or statement templates to speed up your billing process. While using spreadsheets seems to be a common (and justifiable) notion to be bad for business, as it is time-consuming and leaves room for errors, it makes sense to invest in a good billing software or billing system.
Tip 3: Intelligence Integration
Aside from automating your billing process, picking an invoicing software that is open to integration with other tools is essential. For this instance, you can integrate your Customer Relationship Management (CRM) or your email. The best billing process enables you to work faster without the hassle.
Tip 4: Go Online
The advent of the internet turns every transaction into electronic processes. Even your billing process can go online. There are several considerations why it is beneficial to use the internet. If you have a billing app or website, your clients can access it 24/7. This way, they do not need to wait until your physical business location opens before attending to their business with you.
What are the different types of billing?
- Milestone Billing: This billing method requires the completion of a milestone (this could be an event or a contract). After the milestone completion, billing comes right after.
- Progress Billing: Invoices are generated along with the costs incurred on a routine, monthly, or bi-monthly basis. Hence, the completion of cost recovery is before delivery.
- Sub-line-item Billing: It is a billing method popular in a fixed fee or a one-time service. When the service has been provided or a product/project is delivered, the payment is made.
- Billing for On-going Services: The for on-going services like online subscriptions, software plans, etc. is a recurring payment plan. The payment is made weekly, monthly, or even longer depending on the nature of the service.
- Prorated Billing: This type of billing charges clients based on the cost they incurred per day. Therefore, clients only pay for the number of days that they use the service. In some cases, this is the best option for clients who buy a service or a product because canceling earlier does not lead to overcharging.
What are the different types of billing statements?
- Request for Billing Statement
- Billing Authorization Statement
- Parking Permit Billing Statement
- Utility Billing Statement
- Online Billing Statement
- Patient Billing Agreement Statement
- IT Services Billing Statement
- Monthly Billing Statement
- Standard Billing Statement Template
- Formal Billing Statement
- Reconciliation of Billing Statement
- Attorneys Monthly Billing Statement
- Electronic Bill Statement Agreement
Is it possible to have errors in your billing statement?
Yes. In fact, 80% of all medical bills contain at least one error. Because of that, hospitals lose 68 billion US dollars each year, according to the Etactics.
Timely and adequate customer payments are essential for any business. An efficient billing statement is the foundation of a streamlined payment collection process. And it is crucial for accounting and bookkeeping too. Hence, businesses should invest in making useful billing statements to improve efficiency and minimizes losses. For your convenience, download one of our templates from our collection today!