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Data
Processing
Information
Output
INTERNAL CONTROLS
Revenue Cycle
(Order to
Cash)
Industry
Specific
Integrated
database
Production
Cycle
GL/Reporting
HR/Payroll
Cycle
(Hire to retire)
Different Industries
Manufacturing/Wholesale/Retail (53%* of
economy)
Financial services
Information (entertainment and media)
Hospitality (hotel, restaurants)
Professional services (consulting, outsourcing)
Transportation (freight, people)
Utilities
* 2007 US Census Economic Data
C u s to m e r
S e rv ic e
V P o f M a n u fa c tu r in g
W a reh o u se
S h ip p in g
CFO
C o n tr o lle r
B illin g
D e p t.
A c c o u n ts
R e c e iv a b le
T re a s u re r
C r e d it
M anager
C a s h ie r
1.
2.
3.
4.
Take Order
Process order (deliver service or products)
Invoice
Collect cash
Expenditure Cycle
Sales opportunity
Purchase need/requisition
Ship Goods (pull from inventory, pack, Receive Goods (receive, packing slip,
ship, packing slip)
unpack/inspect, add to inventory)
Invoice to customer (update sales
journal, AR ledger)
Receive cash (match to invoice, update Pay cash (match invoice, receipt, PO,
cash journal/AR ledger)
update cash journal/AP ledger)
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http://www.youtube.com/watch?v=4eOr0PfwFgs
http://www.youtube.com/watch?v=TdGkadMZDXk&feature=PlayList&p=734A9F6AE0ED15D3&index=1
Seidensticker
http://www.youtube.com/watch?v=RbNzF_kw-Dg
How it works
http://www.youtube.com/watch?v=MAA9JpGraoU
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12
1.
2.
3.
4.
Take Order
Process order (deliver service or products)
Invoice
Collect cash
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Credit Check
Credit Manager approves $10,000 credit limit
Credit Limit
10000.00
AR Balance
2500.00
New Order
7000.00
(Over)/Under limit 500.00
Any AR balances >60 days outstanding?
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Invalid orders
Uncollectible accounts
Loss of customers
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Automated Warehouses
Amazon Warehouse2009
https://www.youtube.com/watch?v=i6H7nfHjHtY
https://www.youtube.com/watch?v=6KRjuuEVEZs
2010: http://www.youtube.com/watch?v=Z2Bs0nqVyqs
Schaefer Systems
http://www.youtube.com/watch?v=6UXQRHObj1Q&feature=BFa&list=PL381D2CB5436E3042&lf=results_main
http://www.youtube.com/watch?v=0Pr3-84te0Q&feature=BFa&list=PL381D2CB5436E3042&lf=results_main
http://www.youtube.com/watch?v=5EjJGRKvpkc&feature=BFa&list=PL381D2CB5436E3042&lf=results_main
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Theft of inventory
Shipping errors
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Stop here
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Billing
Invoice created from sales order and items
shipped
Do not bill for items not shipped (back order)
Invoice creates accounting entry for revenue/AR
What happens if invoices are delayed?
Sales in wrong period
Mismatch with cost of sales (inventory transfer)
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C u s to m e r
S e rv ic e
V P o f M a n u fa c tu r in g
W a reh o u se
S h ip p in g
CFO
C o n tr o lle r
B illin g
D e p t.
A c c o u n ts
R e c e iv a b le
T re a s u re r
C r e d it
M anager
C a s h ie r
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Billing errors
Posting errors in AR
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Collect Cash
Theft of cash is a significant threat
Separate handling from recording
Cashier within Treasurers office
Use Remittance Advice, copies of checks, lists,
input/stored data to communicate to AR Dept
Lapping can occur if AR handles cash and records
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Cash Management
Cash is King
Whoever has the gold makes the rules
Cant collect until you send the invoice
Value of a business is future cash flows
Cash flow budget is essential management tool
Actual results reportingsome track daily!
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Poor performance
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