Chapter 6

Billing and Collections

What Is the Billing and Collections Process Flow?

As the company bookkeeper, you will be deeply involved in many aspects of billing customers and collecting their payments. The process actually starts sooner, when the company decides whether to grant credit to its customers, continues on to creating customer invoices, and then concludes with either the collection of cash or the issuance of credit memos. Here is how each of the steps in this process works:


1. A customer contacts the company with an order.

2. If the customer is an existing one, then you verify the amount of credit available. If the credit is sufficient, stamp the order as approved and send it to the shipping department. If the credit is not sufficient, go to the next step.

3. If the customer is a new one or its existing credit is not sufficient, contact the customer and send a credit application.

4. Upon receipt of the completed application, obtain a credit report and decide if you will grant credit, and how much.

5. If you grant sufficient credit for the order, stamp the order as approved and send it to the shipping department.

For Accounting Software

If you are using accounting software, the software will hide all unapproved orders, so that the shipping department will not even see them, and so cannot ship them.


1. The shipping department checks to see if the customer order contains a credit approval stamp, and ships the merchandise to the customer if the credit ...

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