CRPA Customer Billing & Invoice Management 2

Question 1

Which billing cycle practice most directly reduces Days Sales Outstanding (DSO)?

Accepted Answer

Invoicing customers immediately upon goods delivery or service completion

Answer

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?

Accepted Answer

A temporary suspension of collection activity on a specific invoice while a dispute is being investigated

Answer

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:

Accepted Answer

The performance obligation has been satisfied per ASC 606

Answer

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?

Accepted Answer

Days Sales Outstanding (DSO)

Answer

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:

Accepted Answer

Conduct a root-cause analysis and negotiate formal deduction policies with the customer

Answer

Root-cause analysis identifies why unauthorized deductions occur, and negotiating formal policies prevents recurring short-payments while preserving the customer relationship.

CRPA - Certified Receivables Professional Practice Test

CRPA - Certified Receivables Professional Practice Test

CRPA Customer Billing & Invoice Management 2