Customer Accounting / Billing

Reference Number: MTAS-1382
Tennessee Code Annotated
Reviewed Date: May 25, 2018
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Customer Accounting
Customer accounting consists of several different issues. A good customer accounting system will reduce bad debt loss and improve internal control, cash flow, and net income.

Customer Billing
Customer billing for water and sewer services is usually done on a monthly basis. Billing may be done “in house” by the city’s computer system; billing software packages are readily available. Some cities may choose to use an outside billing service. In that case the city will read the meters and provide the information to the vendor for billing.

In smaller systems all of the billing may be prepared and mailed at one time. Larger systems may want to do cycle billing. Meter reading routes are divided into groups called cycles. Bills are prepared and mailed using these cycles based on a monthly schedule. Cycle billing can help the city have a smoother work flow and provide a better cash flow. Whether billing is done all at once or in cycles, care should be taken to send customers their bills at approximately the same time each month. This cuts down on customer complaints and allows them to better budget for the utility payment.

As a part of the billing and accounting process, cities should maintain proper accounts receivable records. Billing totals and payments should be recorded and balanced to accounts receivable totals. One way to accomplish this is for cities to maintain an open balance that reflects outstanding balances on each customer’s account. The open balance would contain an “aging” of account balances so that past due accounts could be flagged for collection. Accounts receivable should be balanced monthly.

 

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