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The Expenditure Cycle: Purchasing to Cash Disbursements - Coggle Diagram

- - - - How can payments to vendors be managed to maximize cash flow?
      - How can the organization maintain sufficient cash to take advantage of any discounts suppliers offer?
      - How can information technology (IT) be used to improve both the efficiency and accuracy of the inbound logistics function?
      - How can the organization consolidate purchases across units to obtain optimal prices?
      - Which suppliers provide the best quality and service at the best prices?
      - What is the optimal level of inventory and supplies to carry?
- - - - Revenue Cycle Activty
        
        Shipping is deliver merchandise or services to customers (outbound logistics)
        
        Billing is send invoices to customers
        
        Sales order entry is process orders from customers
        
        Cash collections—process payments from customers
      - Expenditure Cycle Activity
        
        Receiving—receive merchandise or services from suppliers (inbound logistics)
        
        Processing invoices—review and approve invoices from suppliers
        
        Ordering of materials, supplies, and services is send orders to suppliers
        
        Cash disbursements—process payments to suppliers
  - - - Threats
        
        Accepting unordered items
        Mistakes in counting
      - Controls
        
        Requiring existence of approved purchase order prior to accepting any delivery
        
        Do not inform receiving employees about quantity ordered
        
        Require receiving employees to sign receiving report Incentives
        
        Use of bar codes and RFID tags
        
        Configuration of the ERP system to flag discrepancies between received and ordered quantities that exceed tolerance threshold for investigation
    - - Threats
        
        Errors in supplier invoices
        Mistakes in posting to accounts payable
      - Controls
        
        Verification of invoice accuracy
        
        Requiring detailed receipts for procurement card purchases
        
        ERS
        
        Restriction of access to supplier master data
        
        Verification of freight bill and use of approved delivery channels
        
        Data entry edit controls
        
        Reconciliation of detailed accounts payable records with the general ledger control account
    - - Threats
        
        Stockouts and excess inventory
        Purchasing items not needed
      - Controls
        
        Perpetual inventory system
        
        Bar coding or RFID tags
        
        Periodic physical counts of inventory
        
        Perpetual inventory system
        
        Review and approval of purchase requisitions
        
        Centralized purchasing function
    - - Threats
        
        Failure to take advantage of discounts for prompt payment
        Paying for items not received
      - Controls
        
        Filing of invoices by due date for discounts
        
        Cash flow budgets
        
        Requiring that all supplier invoices be matched to supporting documents that are acknowledged by both receiving and inventory control
        
        Budgets (for services)
        
        Requiring receipts for travel expenses
        
        Use of corporate credit cards for travel expenses
    - - Threats
        
        Failure to take advantage of discounts for prompt payment
        Paying for items not received
      - Controls
        
        Filing of invoices by due date for discounts
        
        Cash flow budgets
        
        Requiring that all supplier invoices be matched to supporting documents that are acknowledged by both receiving and inventory control
        
        Budgets (for services)
        
        Requiring receipts for travel expenses
        
        Use of corporate credit cards for travel expenses
- - - - Quality of materials
      - Dependability in making deliveries
      - Price