COP Billing, Invoicing & Compliance Standards 2 — Questions and Answers
Question 1: A customer claims they never received an invoice for a shipment delivered 45 days ago. What is the order processor's first step?
- Issue a credit memo immediately
- Resend the original invoice with the same invoice date
- Verify the invoice was sent and confirm the customer's billing address on file (Correct answer)
- Escalate to collections without further action
Correct answer: Verify the invoice was sent and confirm the customer's billing address on file
The processor should first verify the invoice was sent and confirm contact details before resending or escalating.
Question 2: Which document serves as the legal request for payment and includes itemized charges, quantities, and agreed prices?
- Purchase order
- Packing slip
- Commercial invoice (Correct answer)
- Bill of lading
Correct answer: Commercial invoice
A commercial invoice is the formal billing document detailing goods, quantities, prices, and payment terms.
Question 3: A customer's purchase order specifies Net 30 payment terms, but your company's standard terms are Net 15. Which terms govern the transaction?
- Always the seller's terms
- Always the buyer's terms
- The terms agreed upon in the executed contract or accepted order confirmation (Correct answer)
- Whichever terms are shorter
Correct answer: The terms agreed upon in the executed contract or accepted order confirmation
Payment terms are governed by the mutually agreed contract or accepted order confirmation, not a default preference.
Question 4: What is a 'disputed invoice' hold, and why is it used?
- A block placed on future orders until an invoice is paid
- A temporary suspension of collection activity while a billing disagreement is under review (Correct answer)
- A penalty fee added when payment is late
- A credit freeze applied by the finance department
Correct answer: A temporary suspension of collection activity while a billing disagreement is under review
A disputed invoice hold pauses collection efforts while the discrepancy is investigated so the customer is not penalized unfairly.
Question 5: An invoice shows a quantity of 100 units shipped but the customer's receiving log shows only 92 units received. What should the order processor issue?
- A revised invoice for 92 units and a credit memo for 8 units (Correct answer)
- A collections notice for the full 100 units
- A new purchase order for the 8 missing units
- A debit memo charging the customer for the 8 units
Correct answer: A revised invoice for 92 units and a credit memo for 8 units
A credit memo for the 8-unit shortage corrects the billing to match what was actually received.
Question 6: Which regulation requires U.S. businesses to retain financial records, including invoices, for a minimum period to satisfy tax and audit requirements?
- OSHA standards
- IRS recordkeeping rules (generally 3–7 years) (Correct answer)
- HIPAA privacy rules
- FCPA guidelines
Correct answer: IRS recordkeeping rules (generally 3–7 years)
IRS guidelines generally require businesses to retain records supporting tax returns for at least 3 to 7 years depending on the scenario.
Question 7: What does the term 'aging report' refer to in the context of accounts receivable?
- A report tracking employee tenure in the billing department
- A document showing how long outstanding invoices have been unpaid, grouped by time bucket (Correct answer)
- A log of customer complaints organized by date
- A record of purchase orders sorted by order age
Correct answer: A document showing how long outstanding invoices have been unpaid, grouped by time bucket
An accounts receivable aging report categorizes unpaid invoices by how many days past due they are, helping prioritize collections.
COP Billing, Invoicing & Compliance Standards 2
A customer claims they never received an invoice for a shipment delivered 45 days ago.
What is the order processor's first step?