Accounting Best Practices, Fifth Edition

4–7. Print Separate Invoices for Each Line Item

When an accounting department issues an invoice containing a large number of line items, it is more likely that the recipient will have an issue with one or more of the line items, and will hold payment on the entire invoice while those line items are resolved. Though this may not be a significant issue when an invoice is relatively small, it is a large issue indeed when the invoice has a large dollar total, and holding the entire invoice will have a serious impact on the amount of accounts receivable outstanding.

One way to avoid this problem is to split large invoices into separate ones, with each invoice containing just one line item. By doing so, it is more likely that some invoices will be paid at once, while other ones for which there are issues will be delayed. This can have a significant positive impact on a company’s investment in accounts receivable.

The only complaint that arises from this approach is that customers can be buried under quite a large pile of invoices. This can be ameliorated by clustering all of the invoices in a single envelope, rather than sending a dozen separately mailed invoices on the same day. Also, it may be prudent to cluster small-dollar line items on the same invoice, since this will cut down on the number of invoices issued, while not having a significant impact on the overall receivable balance if these invoices are put on hold.

Cost:

Installation time: