The primary external exchange of information is with customers.
Sales Order Entry
Example: Holiday shopping
Once the item(s) become available, a PICKING TICKET is created.
The picking ticket authorizes the inventory control function to release merchandise to the shipping department.
The PACKING SLIP lists the quantity and description of each item included in the shipment.
THE PACKING SLIP SHOULD ALWAYS BE INCLUDED WITH A MERCHANDISE SHIPMENT TO A CUSTOMER
The BILL OF LADING is a legal contract that defines responsibility for the goods in transit.
Under the OPEN-INVOICE METHOD, customers normally pay according to each invoice.
The customer is asked to return a copy of the invoice when mailing in their payment. This return copy is referred to as the REMITTANCE ADVICE
Under the BALANCE-FORWARD METHOD, customers typically pay according to the amount shown on a MONTHLY STATEMENT.
A MONTHLY STATEMENT lists all transactions, including both sales and payments.
REGULARLY REVIEWING AN ACCOUNTS RECEIVABLE AGING REPORT CAN HELP MANAGEMENT SPOT FIRMS WHO ARE FALLING BEHIND IN THEIR PAYMENTS.
A LOCKBOX is a postal address to which customers send their remittances. The participating bank picks up the checks from the post office box and deposits them to the company’s account.
Under an ELECTRONIC LOCKBOX arrangement, the bank electronically sends the company information about the customer account number and the amount remitted as soon as it receives and scans those checks.
By using an ERP to merge the billing, sales, and marketing functions, the firm may be able to use customer’s past purchase history to send information about related products and services the customer may be interested in.
Performed to compare the quantity ordered with the standard amounts normally ordered.
Performed to verify that each transaction record contains all appropriate data items.
Example: Error message saying “Please enter your phone number.”
Performed to test a numerical amount against a fixed value
Example: Error message saying “Your order exceeds your available credit. You will be contacted within 8 hours.”
Matching customer account numbers and inventory items numbers to the numbers in the customer and inventory master files
Ensure that the proper account is being credited
Ensure that only numeric values are entered for payment amounts
1) Handling cash and posting remittances to customer accounts
2) Handling cash and authorizing credit memos
3) Issuing credit memos and maintaining customer accounts
Segregation of duties and minimization of cash handling can help lessen the exposure of loss of assets.