Eliminate month-end statements

The month-end statement is a summary of all unpaid invoices and unused credits that a customer has. It is intended to provide information to those customers who want to compare the seller's record of receivables to their own records, to see if there are any differences requiring reconciliation. This might initially appear to be a prudent way for accountants to match records, thereby ensuring that payments are made on time.

The reality is somewhat different, since recipients rarely have time to examine the statements, and instead throw them away without even a quick perusal. They may even consider statements to be an annoyance. A typical accounts payable person instead just waits for the collections staff of the seller to contact him if a payment is late, thereby putting the investigative burden on the seller.

Unless the seller is willing to convert the month-end statement into a dunning letter, the most efficient solution is to stop issuing statements. This elimination saves the time of the billing staff, as well as eliminating the costs of statement paper and postage. Also, since statements are usually mailed in the midst of the month-end closing process, their elimination creates time for other activities that may lead to a faster issuance of financial statements.

Related Courses

Bookkeeping Guidebook 
New Controller Guidebook