revenue cycle maintain A/R - 2 ways

recurring set of business activities and data processing operations associated with 1. open-invoice
providing goods/services to customers and collecting cash in payment sales 2. balance-forward
revenue cycle process open-invoice method
- customers place orders/ salespeople enter orders method for maintaining A/R in which customers pay according to each invoice; 2
- system verifies customer credit, checks inventory availability, notifies warehouse copies of invoice mailed to customer, one copy returned with payment
and shipping about sale remittance advice
- warehouse and shipping department enters inventory activity copy of sales invoice returned with customer payment that indicates the invoices,
- invoice program generates invoices statements, or other items being paid
- customer sends check/ online bill pay service balance-forward method
- bank sends remittance data, updates cash, A/R, and customer balances method for maintaining A/R in which customers pay according to amount shown on
sales order monthly statement; remittances applied against total account balance
document created during sales order entry; lists item numbers, quantities, prices, and monthly statement
terms of sale lists all transactions that occurred during past month and informs customers of current
sales order entry process - steps account balance
1. take customer order cycle billing
2. check and approve customer credit producing monthly statements for subsets of customers at different times
3. check inventory availability credit memo
4. respond to customer inquiries document approved by credit manager authorizing billing department to credit
electronic data interchange (EDI) customer's account
use of computerized communications and a standard coding scheme to submit cash collections
business documents electronically in a format that can be automatically processed by collecting and processing payments from customers
the recipient's information system remittance list
credit line document listing names and amounts of all customer payments received in the mail
max allowable credit for each customer, based on past credit history and ability to pay lockbox
accounts receivable aging schedule postal address to which customers send their remittances (arrangement with the
report listing customer account balances by length of time outstanding bank); bank picks up checks and deposits into company's account
checking inventory availability - process electronic lockbox
- if sufficient inventory, sales order is completed, inventory reduced by order bank electronically sends company info about the customer account number and
- shipping, inventory control, and billing departments notified of sale amount remitted as soon as it receives payment
backorder electronic funds transfer (EFT)
document authorizing the purchase or production of items that is created when there transfer of funds through use of online banking software; accomplished through
is insufficient inventory to meet customer orders banking system Automated Clearing House (ACH) network
picking ticket financial electronic data interchange (FEDI)
document that lists the items and quantities ordered and authorizes inventory control combination of EFT and EDI that enables both remittance data and funds transfer
function to release merchandise to the shipping department instructions to be included in one electronic package
radio frequency identification (RFID) tags cash collection - segregation of duties
- receive and send wireless signals 1. handling cash or checks and posting remittances to customer accounts
- can be incorporated into products 2. handling cash or checks and authorizing credit memos
- data entry occurs automatically 3. handling cash or checks and reconciling the bank statement
customer relationship management (CRM) system universal payment identification code (UPIC)
software that organizes information about customers in a manner that facilitates number that enables customers to remit payments via an ACH credit without requiring
efficient and personalized service seller to divulge detailed information about its bank account
shipping - steps cash flow budget
1. picking and packing; 2. shipping order budget that shows the projected cash inflows and outflows for specified period
pick and pack the order - process CRM system
- picking ticket (generated by sales order entry) used to identify products and quantity System that contains customer-related data organized in a manner to facilitate
to pick from inventory customer service, sales, and retention
- inventory transferred to shipping Open-invoice method
radio-frequency data communication (RFDC) terminals Method of maintaining customer accounts that generates payments for each
wireless technology that provides information about which items to pick and where located individual sales transaction
ship the order - process Credit Memo
- count goods delivered from warehouse Method of maintaining customer accounts that generates payments for each
- compare physical count of inventory with quantities on picking ticket and with sales order individual sales transaction
- enter sales order number and quantities to update inventory master file Credit Limit
- produces packing slip and bill of lading Maximum possible account balance for a customer
packing slip Cycle billing
document listing the quantity of each item included in a shipment Process of dividing customer account master file into subsets and preparing invoices
bill of lading for one subset at a time
legal contract that defines responsibility for goods while they are in transit; identifies FEDI
carrier, source, destination, shipping instructions System that integrates EFT and EDI information
billing - steps Remittance advice
1. invoicing; 2. updating A/R Turnaround document returned by customers with payments
invoicing lockbox
information processing activity that repackages and summarizes information from the Post office box to which customers send payments
sales order entry and shipping activities Back order
sales invoice Document used to indicate stock outs exist
document notifying customers of amount of a sale and where to send payment Picking Ticket
accounts receivable function Document that authorizes removal of merchandise from inventory
uses information on the sales invoice to debit customer accounts and subsequently Bill of Lading
credits accounts when payments received Document used to establish responsibility for shipping goods via a third party