CRPA Customer Billing & Invoice Management 1 — Questions and Answers
Question 1: Which billing method sends invoices automatically based on predefined contract milestones or time intervals?
- Manual billing
- Recurring/automated billing (Correct answer)
- Progress billing
- Retainer billing
Correct answer: Recurring/automated billing
Recurring/automated billing triggers invoices based on predefined schedules or milestones without manual intervention, reducing errors and improving cash flow predictability.
Question 2: What is the primary purpose of a credit memo in accounts receivable?
- To record a new sale to a customer
- To reduce the amount owed by a customer due to returns or adjustments (Correct answer)
- To request payment from a customer past due
- To document a customer's credit limit increase
Correct answer: To reduce the amount owed by a customer due to returns or adjustments
A credit memo reduces the balance a customer owes, typically issued for product returns, billing errors, or agreed-upon price adjustments.
Question 3: Which invoice element is most critical for ensuring timely payment according to AR best practices?
- Company logo placement
- Clear payment terms and due date (Correct answer)
- Invoice color scheme
- Font size of line items
Correct answer: Clear payment terms and due date
Clearly stated payment terms and due dates eliminate ambiguity, directly reducing late payments by setting explicit customer expectations.
Question 4: A customer claims an invoice contains a pricing discrepancy. What is the FIRST step an AR professional should take?
- Immediately issue a credit memo
- Write off the disputed amount
- Validate the invoice against the original sales order or contract (Correct answer)
- Escalate to the legal department
Correct answer: Validate the invoice against the original sales order or contract
Validating the invoice against the original sales order or contract establishes the factual basis of the dispute before any financial adjustment is made.
Question 5: Which of the following best describes 'invoice aging' in the context of billing management?
- The process of archiving old invoices
- A report categorizing outstanding invoices by the length of time they have been unpaid (Correct answer)
- The automatic cancellation of invoices over 90 days old
- A method for adjusting invoice amounts over time for inflation
Correct answer: A report categorizing outstanding invoices by the length of time they have been unpaid
Invoice aging reports group outstanding receivables by time buckets (e.g., 0–30, 31–60, 61–90 days) to help AR teams prioritize collections efforts.
Question 6: Electronic invoicing (e-invoicing) improves billing efficiency primarily by:
- Eliminating the need for payment terms
- Reducing manual data entry, postage costs, and delivery time (Correct answer)
- Allowing customers to avoid paying sales tax
- Replacing the accounts receivable department
Correct answer: Reducing manual data entry, postage costs, and delivery time
E-invoicing automates invoice delivery and reduces errors from manual data entry, cutting processing costs and accelerating the billing cycle.
Question 7: What does a 'dunning' process refer to in accounts receivable?
- The process of setting customer credit limits
- A systematic series of communications sent to customers with overdue invoices (Correct answer)
- The reconciliation of billing records with bank statements
- A method for generating invoices in bulk
Correct answer: A systematic series of communications sent to customers with overdue invoices
Dunning is a structured escalation of communications—email, letter, phone—sent to past-due customers to prompt payment of outstanding invoices.
CRPA Customer Billing & Invoice Management 1
Which billing method sends invoices automatically based on predefined contract milestones or time intervals?