CRPA Customer Billing & Invoice Management 2 — Questions and Answers
Question 1: Which billing cycle practice most directly reduces Days Sales Outstanding (DSO)?
- Sending invoices at the end of the month regardless of delivery date
- Invoicing customers immediately upon goods delivery or service completion (Correct answer)
- Batching all invoices quarterly
- Waiting for customer purchase order confirmation before invoicing
Correct answer: Invoicing customers immediately upon goods delivery or service completion
Invoicing immediately upon delivery or service completion starts the payment clock sooner, directly shortening the average collection period and reducing DSO.
Question 2: What is a 'disputed invoice hold' and when should it be applied?
- A hold placed on all invoices during month-end close
- A temporary suspension of collection activity on a specific invoice while a dispute is being investigated (Correct answer)
- An automatic deduction applied when an invoice exceeds the customer's credit limit
- A penalty fee added to invoices that customers dispute without cause
Correct answer: A temporary suspension of collection activity on a specific invoice while a dispute is being investigated
A disputed invoice hold pauses collection efforts on contested invoices to avoid damaging customer relationships while the discrepancy is being resolved.
Question 3: Under US GAAP, revenue on an invoice may only be recognized when:
- The invoice is sent to the customer
- The cash is received from the customer
- The performance obligation has been satisfied per ASC 606 (Correct answer)
- The invoice is approved internally
Correct answer: The performance obligation has been satisfied per ASC 606
ASC 606 requires revenue recognition when (or as) a performance obligation is satisfied, regardless of when the invoice is issued or cash is collected.
Question 4: Which metric measures the effectiveness of a company's billing and collections process?
- Gross Profit Margin
- Days Sales Outstanding (DSO) (Correct answer)
- Return on Equity (ROE)
- Inventory Turnover Ratio
Correct answer: Days Sales Outstanding (DSO)
DSO measures the average number of days it takes to collect payment after a sale, making it the primary KPI for billing and collections effectiveness.
Question 5: A customer consistently deducts unauthorized amounts from invoice payments. The BEST long-term resolution is to:
- Write off the deductions permanently
- Issue a credit memo for each deduction without investigation
- Conduct a root-cause analysis and negotiate formal deduction policies with the customer (Correct answer)
- Immediately place the customer on credit hold
Correct answer: Conduct a root-cause analysis and negotiate formal deduction policies with the customer
Root-cause analysis identifies why unauthorized deductions occur, and negotiating formal policies prevents recurring short-payments while preserving the customer relationship.
Question 6: What is the purpose of a billing audit in accounts receivable management?
- To generate new invoices for unpaid accounts
- To verify the accuracy and completeness of invoices issued against contracts and delivery records (Correct answer)
- To calculate employee bonuses in the billing department
- To remove duplicate customers from the AR system
Correct answer: To verify the accuracy and completeness of invoices issued against contracts and delivery records
A billing audit cross-checks issued invoices against underlying contracts and fulfillment records to identify errors, over-billing, or omissions before they become disputes.
Question 7: Which of the following is a key benefit of implementing a customer self-service billing portal?
- It eliminates the need for payment terms
- It reduces inbound billing inquiries and accelerates dispute resolution by giving customers direct invoice access (Correct answer)
- It automatically transfers overdue accounts to collections
- It increases the number of invoices generated per month
Correct answer: It reduces inbound billing inquiries and accelerates dispute resolution by giving customers direct invoice access
Self-service portals allow customers to view, download, and dispute invoices independently, reducing AR staff workload and shortening dispute resolution timelines.
CRPA Customer Billing & Invoice Management 2
Which billing cycle practice most directly reduces Days Sales Outstanding (DSO)?