Preventative and Detective Control in Monthly Customer Statements

Is sending customers monthly statements of their invoices considered a preventative and detective control?

Sending customers a monthly statement of their invoices owed is both a preventative and detective control.

Preventative controls are measures taken to prevent errors or fraud from occurring in a business process. By sending customers a monthly statement of their invoices owed, the company is promoting transparency and ensuring timely payments, which helps prevent errors or fraudulent activities.

On the other hand, detective controls are used to detect problems that have already occurred in the system. In this case, the monthly statements serve as a detective control by helping identify any discrepancies in the accounts, errors, double billing, or fraud. It allows the business to detect issues and take corrective action promptly.

Overall, the process of sending monthly statements to customers is a crucial practice that serves both preventative and detective control functions in maintaining financial integrity and transparency within the business.