Top 10 Billing Errors

Every service provider would like its billing to be perfect. When there are problems on the bill, however, the common scapegoat is the billing system. Yet rarely is it the fault of the billing system, which has merely executed the data exactly as received-What it sees is what it bills! But it is much easier to blame the system instead of the more likely culprit: the surrounding human processes and procedures that provide the conduits to billing.

The goal of all telecommunications service providers is to minimize billing issues for two primary reasons: Reduce the impact on the customer and the customer care organization and reduce the negative revenue impact, by controlling both actual dollars lost and customer churn.

The internal impact of billing problems is well understood. Ask any customer care representative or finance analyst what happens when billing is incorrect. After all, the bill is the only tangible representation of the service provider that the customer receives.

All companies must have an invoice verification process to evaluate the sample output from every billing cycle. No company should believe that there is no need to do this. Things do change, and do go wrong, even if nothing has been modified in the actual billing software. As problems are discovered, ad hoc tools should be in place to immediately determine the impact on the customer and company finances. If the problems are found to be minor in both categories, the cycle can usually be approved, and customer inquiries and issues managed after the fact.

However, there are times when a billing cycle would need to be rejected and totally rerun. Here are the top 10 reasons, and they are the BIG items. The 10 reasons listed below are not necessarily in the same order for every company, but are all high on the list. Each company has its own particular strengths and weaknesses, but it is fair to say that these have all been experienced at one time or another. If your organization currently performs rigorous invoice verification prior to releasing a cycle, these are probably the top 10 on your list, too. If it does not, it is certain that these things are happening from time to time; the difference is that your customers discover it first.

1. Bad or missing AR data: Accounts receivable (AR) data is not extracted correctly, the AR data is old, or cash and lockbox postings are wrong or not applied. All of these errors can make the customer’s invoice totally incorrect. Customers quickly notice if payments they know they have made do not seem to be applied, or if their balance is incorrect. Additionally, incorrect AR balances may initiate inappropriate dunning or disconnect messages (see No. 6).

2. Incorrect rates: These are usually the result of rate tables not being populated correctly when rate changes were made, the wrong version of rate tables being used, or new versions of rate tables not being uploaded properly. The results affect both revenues and customers. With flat-rate services so popular today, this error will immediately be visible to the customer if it goes undetected by the service provider.

3. Incorrect invoice calculation: The invoice should add up to the sum of its parts: Prior AR Balance + Current Usage + Recurring and Nonrecurring Charges - Discounts +/- Adjustments + Taxes and other fees should = Invoice Total Amount Due. During invoice verification this should be checked first, but often it is not. Common reasons for this problem include new code that recognizes adjustments incorrectly (credits calculated as debits), incorrect tax table calculations, and rounding of digits up to full cents.

4. Incomplete billing: This error can result from a variety of different problems. If all of the required customer data is not extracted from the customer database, not all customers will be billed in the cycle, and accounts may be inaccurate. In other cases, all of the traffic that should have been included in a cycle (e.g. days or portions of days) may be missing. At first glance, one might think that this is not a big issue, since it can “just be picked up next month.” Customers, however, feel differently. And so does the finance department, which was anticipating a certain amount of revenue but received less. Aged traffic of any type becomes more suspect and less collectible, and creates significant issues in revenue accounting. The severe situations, however, are cases where traffic is missing and not recoverable; these represent an obvious impact in unrecoverable revenue.

5. Bar codes or check digits incorrect or misaligned: At the bottom of most invoices is the string of information required for invoice sorting and payment processing. If it is incorrect, innumerable costs will occur in terms of time, money and manual processing. These codes are used for ZIP code presorting, automated direction to a lockbox and automated payment processing. Obviously, if these are wrong or misplaced on the invoice they cannot be read or handled properly.

6. Incorrect dunning or regulatory messages: Invoice messaging is closely tied to current account status, current usage and aging AR. The application of these messages is controlled by internal company policies or external regulatory requirements. If the rules for how these apply are not closely monitored and updated, invalid messages occur on accounts-for example, dunning someone who is currently up to date. In other situations, certain regulatory messages may be required and can create problems if not managed properly. The root cause of these types of message errors is often in table maintenance that dictates which accounts or jurisdictions should receive specific messages.

7. Nonbillable calls on the invoice: Duplicate calls, incomplete calls, and local calls charged as toll calls are all examples of this type of error. Customers are very aware of these errors and notice them immediately if the invoice verification process does not detect them. The common causes for these problems include changes in loads on switches that are not properly tested (see No. 10), reprocessing of files, and bad table maintenance for differentiating between local and toll calls.

8. Approved invoices are not what is printed: Even if all possible efforts are made during invoice verification to detect errors, it is still possible that the invoice could be incorrect. This is often as a result of sending the wrong file, an incomplete file, or an old file to the printing process. Service providers must have a complete verification process that validates the invoices after production as a final visual check and continually verify that the correct invoice file is sent to invoice production.

9. Incorrect marketing messages: This mistake may seem minor and appear to have no revenue impact, but the invoice represents the company. Misspelled words, missing words, wrong messages for specific products all degrade the company image and may cause a significant impact to the call center. The root causes are usually found in the tables that control these messages. These tables must be updated in a timely manner and reviewed properly in both testing and production.

10. Invalid testing: This flaw is actually the root cause of many of the other top 10 mistakes, but it is listed separately since testing is a process that seems to invite shortcuts. Most companies do not spend enough to maintain a testing system that can support all product and plan scenarios and all the possible volumes of traffic. Certain products and plans require large amounts of test data to fully test all discount options. The result is that problems that should have been detected during testing are not found until the system goes live. Other examples of testing problems include the wrong version of code being used after successful testing of the correct version, and different versions being loaded onto different platforms if a company is operating more than one billing center. If you hear that “it was right in test, but it’s wrong in production,” there is a deeper, underlying problem in the overall testing and migration process.

Billing that is accurate, timely and complete is a goal that all systems, processes and procedures must strive to attain with every billing cycle, every month. If a problem is detected, it is not enough to “just fix it” and go on. Effort must be made to determine the root causes and how to change the processes or procedures to ensure that it does not recur. Without identifying the irreversible corrective actions necessary to truly correct a problem at its root cause, it is destined to be repeated. To avoid billing delays, improve customer satisfaction and protect the revenue stream, this investment is time and money well spent.

Linda Gimnich is a principal with The Management Network Group Inc., Overland Park, Kan. TMNG is a multinational management consulting firm that specializes in leading the development and implementation of competitive communications company strategy and operations. Ms. Gimnich can be reached by phone at +1 913 345 9315, or e-mail at TMNGLINDA@aol.com. Visit TMNG’s Web site at www.tmng.com.