Advorra blog

Found a billing error? How a small RIA should fix and record it

By the team at The CollabHub · Co-written with Mohammad Aamish Aaftab
Published 17 Oct 2026

A billing error is any fee charged that doesn't match what the client agreement and your fee disclosures say. When you find one, confirm it against the agreement, work out every affected client and quarter, refund or credit the difference, tell the client in plain words, fix the cause so it can't repeat, and keep a short record of each step. Overbilling usually matters most, but the same process works for underbilling.

A client calls about their quarterly statement. The fee looks higher than last quarter, and their balance didn't grow that much. You open the billing spreadsheet and see it: their rate dropped at renewal in January, and the sheet still has the old one. Two quarters billed at the wrong rate. What you do in the next week matters more than the error itself.

What counts as a billing error?

A billing error is any fee that doesn't match what the client agreement and your fee disclosures say. The common ones in small firms:

What should you do first?

Confirm it against the source, not the spreadsheet. Pull the signed agreement and any amendment, and check the rate, the billing basis and the exclusions. If the agreement and the bill disagree, you have an error. If they agree and the client still thinks the fee is wrong, you have a conversation, not an error.

How do you work out how big it is?

Find the cause, then find everyone it touched. A wrong rate usually affects one client. A broken formula or a missed exclusion rule can affect many. Go back to when the cause started.

Take a hypothetical two-person RIA with about 120 households. The client in the call had a rate cut from 1.00% to 0.85% at renewal in January. Their billable value was about $800,000 in each of the two quarters since.

Total refund due: $600. The firm then checks every other client renewed since January. It finds one more with the same problem, overbilled by $90, who never noticed.

How should you correct it?

1. Refund or credit. Decide whether to refund to the account or credit the next bill, and do it promptly. A refund to the account is usually cleaner and easier to show later.
2. Tell the client. Short and plain: what happened, the amount, how it is being returned, and what you changed so it won't repeat.
3. Fix the cause. For a missed renewal, the fix is a step in your renewal process: the new rate goes into the billing record the day the agreement is signed, and someone else checks it.
4. Re-check the next run. Look at the affected accounts again before the next quarter's fee file goes out.

What should the record show?

• How and when the error was found.
• The cause.
• Every affected client, quarter and amount.
• The refund or credit, with dates.
• When and how each client was told.
• The process change, and who approved it.

Keep it with the billing records for those quarters, and log it wherever your procedures put errors and incidents.

When is this overkill?

A $3 rounding difference on one account doesn't need a memo. It still needs a fix and a line in the log, because small differences that repeat every quarter are how bigger ones hide. Decide a threshold for what gets a full write-up, write it in your procedures, and apply it the same way every time.

How Advorra fits

In Advorra, advisory-fee billing runs quarterly in arrears with the exclusions set on the record, and each run lands on a billing blotter, so you can see what was billed, on what value and at what rate. Incidents and complaints have their own log. See the product page, or read quarterly billing in arrears and the complaints and incidents log.

If you want one thing to do this week: list every client whose rate or terms changed this year, and check each one against last quarter's bill.

A practical process, not legal or compliance advice. Your agreements, your regulator's rules and your compliance consultant decide what your firm must do.