Professional Documents
Culture Documents
Cycle:
Sales to Cash Collections
CHAPTER 12
Objectives
Provides goods and
services to customers
Collects cash in payment
for those sales
Primary Objective:
Provide the right product
In the right place
At the right time for the
Business
Activities:
What are the four basic
revenue cycle business
activities?
1.Sales Order entry
2.Shipping
3.Billing and Accounts Receivable
4.Cash Collections
General Threats
Inaccurate or invalid master
data
Unauthorized disclosure of
sensitive information
Loss or destruction of master
data
Poor performance
General Controls
Data processing integrity controls
Restriction of access to master
data
Review of all changes to master
data
Access controls
Encryption
Backup and disaster recovery
1.0
Sales Order
Entry
Main Activities:
Taking customer orders
Credit approval
Check inventory availability
**Respond to customer
inquiries
Sales Order
Threats
Incomplete/ Inaccurate orders
Uncollectible Accounts (poor
credit)
Invalid Orders (illegitimate orders)
Stockouts or excess inventory
Loss of customers
Reliable
financial
reporting
Operational
effectiveness
and efficiency
Why
?
Assuring achievement
organization's
objectives
Compliance with
laws, regulations
and policies
Digital signatures or
written signatures
Written signatures are used to
authenticate the document issued.
Digital signatures are now trending due
to the rise of technological
advancement which provides easiness
and gets rid of several papers.
mathematical scheme for
demonstrating the authenticity of a
digital message or documents.
Credit limits
credit limit defines the maximum
amount of credit that you are
willing to grant a customer.
Specific authorization to
approve sales to new
customers or sales that
exceed a customers credit
limit
Identify Customer Requirements.
Assess Risk
Compare References
Financial Analysis
Use of bar-codes
or RFID
permit faster and more accurate
recording of information.
Save Time
Reduce Errors
Cut Costs
2.0
SHIPPING
Main Activities:
Picking and Packing the Order
Shipping the Order
Carrier
Picking ticket
Sales
Order
Bill of Lading
Packing Slip
Billing and
Accounts
Receivable
Pick
and
Pack
Sales Order
Goods and
Picking Ticket
Inventory
Ship
Goods
Shipments
Goods
Packing Slip
Bill of Lading
Sales
Order
Entry
Shipping Threats
Picking the wrong items or the
wrong quantity
Theft of Inventory
Shipping errors (delay or
failure to ship, wrong
quantities, wrong items,
wrong address, duplication)
Shipping Controls
Bar-code and RFID technology
Reconciliation of picking lists
to sales order details
Restriction of physical access
to inventory
Documentation of all
inventory
Reconciliation of shipping
documents with sales orders,
picking lists, and packing slips
Use RFID systems to identify
delays
Data entry via bar-code
scanners and RFID
3.0
BILLING
Main Activities:
Invoicing
Sales Invoice
Billing Threats
Failure to Bill
Billing Errors
Customer Account Errors
Posting errors in accounts
receivable
Billing Controls
Separation of BILLING and
SHIPPING functions
Periodic reconciliation of invoices
with sales orders, picking tickets,
and shipping documents
Configuration of system to
automatically enter pricing data
Restriction of access to pricing
master data
Billing Controls
Data entry edit controls
Reconciliation of shipping
documents (picking tickets, bills
of lading, and packing list) to
sales orders
Data entry controls
Billing Controls
Reconciliation of batch totals
Mailing of monthly statements to customers
-- Statement of Accounts
4.0
CASH
COLLECTI
ONS
Cash Collections
Threats:
Theft of Cash
- The primary objective of cash
collections is to safeguard
customer remittances
The following
segregation of duties
should be used to reduce
this risk:
Cash Collection
Threats:
Cash Flow Problems
Law Profits or losses
Over investment capacity
Unexpected changes
Allowing customers too much
credit
- Slow paying
- Too much bad debt
Cash Collection
Control
Separation of cash handling
function from account receivable
and credit functions
Regular reconciliation of back
account with recorded amounts by
someone independent
Use EFT, FEDI, and lock boxes to
minimized handling of customer
payments by employees
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