Credit Where Due

Untangling Discrepancies

When billing disputes arise, there are six steps that can make the snarls disappear in an efficient manner. BY JOHN SLOAN

“When solving problems, dig at the roots instead of just hacking at the leaves.” – Anthony J. D’Angelo, The Collegiate EmPowerment Co.

The impact of billing discrepancies on collections departments can be significant. Not only can resolving disputes eat up a great deal of time, but the way they are handled can reflect on the reputations of those involved. So coming up with a plan to tackle them is crucial.

There are several factors that contribute to any one discrepancy problem. The individuals involved may or may not know how their actions can impact the overall process. The delivery of an ad flight’s schedule can be affected by factors beyond anyone’s control. For stations, this might include technical problems, breaking news, sporting event delays or programming overruns.

For buyers, any deviation from the original schedule requires a human to approve and make changes. Generally, ad agencies or advertisers are notified of alterations as they occur, but buyers do not always adjust the schedules in their systems. That creates mismatches that must be resolved after billing.

With the overall concentration of ad buying at just a few large ad agencies, unresolved billing issues can negatively impact days sales outstanding (DSO). Making matters worse, discrepancy resolution can be a low-priority function delegated to overworked assistant buyers.

The longer a discrepant invoice remains outstanding the more difficult it is to resolve, and the potential for a revenue adjustment increases. Salespeople and ad buyers may move to different accounts or take on different positions. Memories fade, and paperwork is lost or misplaced.

Credit personnel may have little control over the resolution process. But they need to provide prompt and effective problem resolution in the best ways possible. Here are some steps to consider:

First, make sure that you understand the entire order-to-cash process. It may be helpful to create a simple diagram or flowchart of all the steps. Determine how many people are involved and whether they know how their actions impact others in the process. Learn where the handoffs between departments occur, and whether the information provided is sufficient for the receiver.

Second, identify where the problems have taken place. Given the complexity of the sales process, some discrepancies are

normal. But you may pinpoint one area in the process where most of the difficulties arise. For example, they may be the result of human error. Or there might be billing or trafficking system deficiencies that are contributing to the problem.

Third, once discrepancies are identified, determine the person or people who have responsibility for resolving them. Are there priorities that have been established based on the amount of the discrepancy?

Figure out if sales and operational management are aware of the amounts involved. If an invoice adjustment is necessary, determine what approvals are required. Make sure the process is sufficiently transparent so that anyone can determine how far along the issue is toward resolution.

Fourth, determine whether customers are creatively using discrepancies to delay payment. If schedule changes are being communicated to the agency as they occur, but the agency is not making changes within their buying system, identify who is responsible for resolving them.

There may have been delays in receiving copy or last-minute requests for copy alterations that can’t be accommodated. Media standards for the receipt of copy and other scheduling issues must be clearly communicated to agencies and should not be relaxed when agency personnel apply pressure.

Fifth, depending on the size of the collection department, it may make sense to delegate the discrepancy resolution function to one or two people. The characteristics required to successfully solve billing discrepancies are different than those used for routine collection follow up.

Finally, make sure both sales and operational management are fully aware of the number, amount and (if possible) origin of all outstanding billing disputes. Prioritize the layout of the report by disputed amounts, with the largest amounts at the top.

Distribute the report monthly and follow up with a meeting with the appropriate sales manager to discuss how the problem resolution is progressing. If billing adjustments occur, create a separate report showing all adjustments, the reasons and the customers involved.

Additionally, show the impact of all adjustments on sales. That is, what percentage of total sales are lost to billing adjustments?

Billing discrepancies are part of the media sales process and can be a frustrating obstacle for collectors. However, with a well-defined procedure, one can reduce the time and effort necessary to fix them.

The longer a discrepant invoice remains outstanding the more difficult it is to resolve, and the potential for a revenue adjustment increases.

John Sloan is a former executive director of credit services for Turner Broadcasting System. He can be reached at john_sloan23@yahoo.com.