This conclusion is somewhat premature, as this step in the billing process has the necessary complexity as well. Have you ever wondered how VAT is calculated, how invoice details are grouped neatly or what happens in the background when a customer cancels a subscription?
This is part 4 of a series of blogs from FIQAS on billing process optimization.
When the data has been uploaded, usage has been rated and the invoice lines generated the actual bill can be created. This is the document that displays the payment obligation of a customer to a vendor.
Generally, bills do not look very special. But beware, a bill must meet many requirements. The tax office, for example, prescribes the basic data that must always be indicated on an invoice. Vendors not only want to present their corporate identity on their invoices, but also wish to present their sales proposition to their customers in a recognizable and transparent manner.
Just a few of the many issues that are involved with creating and distributing invoices:
- Invoices are offered in more and more formats. Hardcopy invoices in envelopes, invoices as a PDF attachment to an email, a message that a bill is available in a customer portal, a UBL invoice that can be read directly into the books. Invoices nowadays come with payment options as well, such as a payment link in an e-mail, linking to the site of a payment provider.
- An invoice layout is partly determined by the corporate style of the company issuing the invoice. The invoice includes the right groups and consolidation matching the proposition(s) and the clients. In the invoice specification the vendor shows the detailed invoice data. Tax office requirements determine the data that is to be displayed as a minimum.
- There are differences between B2B and B2C invoices. For invoices to authorities even stricter rules apply.
- Convergent billing. Several product lines end up on one invoice. This is still a challenge for many systems. It is particularly complex when invoice lines are provided by different systems.
- Usually only the usage records generated within the billing period must be taken into account, but it is also possible that earlier usage is included (back-billing). For the final invoice upon early termination of the contract, the fixed costs (for example, subscriptions) may have to be calculated proportionately.
- VAT calculation must meet similar, yet different rules in each country. In composite propositions, there may be different VAT rates. To calculate the tax, VAT-class must be defined somewhere, for instance on product level. It is also possible to define an automated business rule for this purpose.
- It may happen (e.g. in telecom) that somewhere in the billing process numbers must be rounded. This has implications for the invoice amounts. Consider where in the process the rounding takes place and to how many decimals.
- Payment behaviour is influenced by the bill. The preference for an invoice lay-out and / or a billing channel can be different for each target group. A/B tests are useful to find out which combination leads to optimal results.
- The financial report must seamlessly integrate with the invoicing. Sales must be booked in a recognizable way. Where and when is revenue taken?
The FIQAS practice: invoice creation and distribution
Invoices are broadly similar. Yet every vendor wishes to express its own identity in their bills. Also every party faces its specific choices and challenges in the background, adding complexity to the making and distribution of invoices. To illustrate this we list a number of practical examples taken from FIQAS projects.
Correction of erroneous invoices
Data from the CRM system of a telecom customer of FIQAS is transferred to the FIQAS billing platform. Technically, input errors in the CRM system do not create problems for the continuation of the invoicing process: data on the resulting invoice correspond with the data in the source system. Yet, the bill does not show what has actually been delivered, so it fails to meet the requirements of the customer. Consequently a credit note must be made, as well as a new debit invoice.
FIQAS solves this in the web application. Here Customer service staff credit the original invoice and immediately set up a new debit invoice. In the next billing run two invoices will be generated and sent to the customer; the credit invoice and the new debit invoice. The new bill then contains corrected customer data and / or custom invoice lines. The source system is updated as well.
Invoice lay-out on customer level and multi-site bills
An energy supplier deals with multi-site customers and single-site customers. Both groups of customers receive invoices in a proprietary format. For multi-site customers monthly summary invoices are made, showing the amounts that will be charged for sometimes dozens of child sites. These bills include many pages with invoice details and are complex due to the aggregation of the total amounts. Single-site invoices – one invoice per location / address – are much less complex and usually consist of two or three pages.
Invoice details: customer convenience, processing time and storage capacity
Fact: 95% of telecom provider customers are not interested in invoice details and invoice related documents. Storing these documents upfront requires storage capacity, and preparing details upfront for all customers requires processing time.
FIQAS has organized this process so that data and documents are retrieved from the database real-time only when they are required on the portal. The end customer has immediate access to usage details and other invoice information, while the system is not put under heavy load. Storage costs are low.
A customer terminates his contract before the contract end date or is de-activated for non-payment. In this situation, an invoice is made until the end of contract period, taking into account legal requirements regarding final bills. This final bill can also take into account vendor’s moderation policy. In this case the customer is billed, for example, only a portion of the remaining installment amount.
The invoice, nearly the last step in the order-to-cash process
Seemingly not the most difficult part of the order-to-cash process, bill creation does have its challenges too. When this part of the billing process is set-up carefully another significant step towards bringing in revenue has been made. The next step is your customer paying for services delivered. And payment behaviour can be controlled too. More on that in our next blog.
Other topics and why this series?
Other topics in this series:
- Part 1: Billing, it could be better
- Part 2: Data collection
- Part 3: Rating
- Part 5: The collection process
- Part 6: Auditability and compliance
The FIQAS specialists have a wealth of experience in organizing, executing and optimizing billing processes. The business cases that we see are often narrowed down to one or two of the above aspects. With this series of articles, we try to do justice to the bigger picture. In part five of this series we will focus on the processes and best practices concerning the collection process: payment processing, reminder strategies and debtor management.
FIQAS is an authority on invoicing processes, established in 1989, with renowned international customers and operating from Aalsmeer (greater Amsterdam area).