I recently had a client ask me how to best to decrease billing errors. We know that financial errors on billing, reports, payables, or any other financial transaction can cause problems. It could hurt relationships with clients, vendors, or even lose credibility with other managers and colleagues. Here are some ways to decrease mistakes and errors and therefore improve accuracy:
1. Second Set of Eyes
It is always better to have another person review your financial processes such as Billing, Accounts Payable, Payroll, and Financial Reports. For example, if you have a complicated billing structure that varies based on client or other one-off type calculations, then the billing process is prone to error. This will make it extra important to have another person review.
In another example, you could have complicated financial reports that get sent out to multiple people. If these reports require manual creation or updating each month, then it is prone to error.
What do you do if it is too time-consuming, expensive, or you don’t have the luxury of having someone review everything? Consider the next idea.
2. Error Proof Template
What if you could create a template in Excel or Google Sheets that decreased errors? This is a good way to ensure you think of all the variables upfront. For example, when billing clients there are input figures sometimes and calculated figures. You should have all the contract terms set upfront and the calculations protected in any template. Then, all you have to worry about are the input numbers each month. This varies depending on your invoices. You can use systems to help with this process but you just want to take as much of the thinking and errors out of the system. Formula and calculation errors are some of the most common and can be easily made when in a hurry.
3. Check Figures
I love to put check figures in my reports. Do you remember in high school math, the teacher telling you to check your work? Sometimes you can link a formula to a check figure which recalculates what the number should be. Then you just compare the numbers in the report to the expected number and make sure there is no variance. I do this most on financial models and reports. It is a great way to make sure if you have multiple people helping with reports that you know it all agrees to each other. Does the Income Statement agree to the Balance Sheet? Does that Balance Sheet balance?
4. Systematic Process
As an organization grows, they have to set up processes that get performed the same way each time. As the process gets improved each time, then errors decrease. For example, if you have someone enter a vendor invoice through a system like Bill.com, you then can route the invoice to an approver. This approver views the bill to ensure the amount, account category, and description is correct. Then the invoices go to a payer who also reviews the invoices and amount. Bill.com will also check to see if an invoice number has been used before and the address or contact information is correct. Using an Accounts Payable process such as this will decrease errors and improves internal controls.
One of my favorite ways to review billing, revenue, and expenses is the compare actuals to a prior month forecast. I think monthly forecasting not only helps you understand how your business is trending so you make good decisions but it also can decrease errors. For example, if you were expecting client revenue to be $50,000 but it was $30,000, then you would research why there is a variance. Maybe you invoiced incorrectly, which can be corrected by doing this analysis. The better you understand the way revenue is earned and your expenses and profit margins in advance, the better you can catch errors and make adjustments. Not only does this help customer and vendor relationships but is a much better business practice as a whole
Save Time and Reduce Errors
I am not saying that you can get rid of errors altogether but there are many things you can do to improve them. The more accurate your invoices, bills, and reports will ultimately save you time and who doesn’t want to do that. Reduced errors will improve your customer relationships. Timely and accurate financials help you make good decisions so you can successfully grow.
If you want to learn more about forecasting for business and nonprofits, check out my award-nominated book and audiobook Forecast your Future: How Small Businesses Exchange Stress and Chaos for Cash and Clarity. Also, check out my course for even more guidance.