Set up a custom field and then use that to select the clients to be billed in each group.

If I'm understanding this correctly I would need to set up a list for email billing and a list for reg mail billing.

Not exactly, you would set up ONE custom field with TWO choices: email and snail mail.

Then you would enter one of the two values for each of your clients.

Then you could use that field as a filter when running bills or any kind of report.