revenue cycle (2. Shipping process
consists two steps
2. Shipping process
- consists two steps
- warehouse department picks the order
- shipping departments packs and ships the order
2.1 picking and packing the order
- source document:
- printed by sales order entry
- triggers the pick - and - pack process
- identifies which product to pick and what quantity.
- warehouse department pick the order transfer to shipping department.
- technology can speed the movement and improve accuracy of perpetual inventory records:
- bar code scanners
- conveyer belts
- wireless technology
- radio frequency identification system
2.2 shipping department
- physical count of nventory.; quantities indecated on pcking ticket.; quantities on sales order.
- Discrepancies can arise if:
- items waren't stored in the locaton indicated
- perpetual inventory records were inaccurate.
- initiate back order if discrepancies arise.
- the clerk:
- updates quantity shipped; produces a packing slip ; bill of lading ; freight bill
- fill customer orders efficiently and accurately
- safeguard inventory
- picking wrong item or quantity to ship
- controls: -uses Online shipping system
-uses bar code scanners and RFID tags
-reconcile packing list to sales order.
- fail to ship goods
-reconcile shipping documents to sales orders, pickng lists and packing slips.
- ship to the wrong address
-application controls such as field check and completeness test.
- billing summarizes information from the slaes order entry and shipping activities.
- requires information from:
- shipping department (quantity)
- sales (prices)
- source document: sales invoice
- notifies the customer amount to be paid and where to send payment.
- in paper form or EDI.
3.2 Updating Accounts Receivable
- perform two basic tasks
- debit customer account = invoiced
- credits customer accounts = payments
- two basic ways to maintain account receiivable:
- open-invoice method (pay according to each invoice)
- balance forward method (pay according to amount on monthly statement)
- distribution of credit memos:
- returns; allowances for damaged goods; write-offs as uncollectible.
- failure to bill customer
controls; - segregate shipping and billing functions
- billing errors
- avoid quantity errors
- bar code scanners
- posting errors in accounts receivables
controls: - sending monthly statements to every customer to provide independent review.
- customers are billed for sales.
- invoices are accurate.
- customer accounts are accurately maintained.
Possible approaches to collecting cash
- Turnaround documents forwarded to accounts receivable:open in mailroom (exp: remittance advices from customer)
- Lockbox arrangements (to prevent theft, improve cash flow management, reach to international customer).
- Electronic lockboxs: bank sends electronic notification to company when received cheque.
- Electronic funds transfer (EET) and bill payment
- Financial electronic data interchange (FEDI)
- credit cards or procurement cards
- safeguards customer remittances
- cash flow problem
-use lockbox arrangement to avoif theft of cash
-obtain discounts for early payment to the company's creditors
-cash flow budgeting.
- Theft of cash
-deposit all cash receipts daily
-proper segregation of cash handling and posting to customer accounts, authorize credit memos