The Acquisition / Payment Process

1
Chapter 7

• The Acquisition / Payment Process

2
Chapter Objectives

• Identify the characteristics of the traditional
  acquisition/payment process and related IT
  applications.
• Describe the criticisms of the traditional
  acquisition/payment process and the IT
  application architecture.
• Develop a REAL model of the acquisition/payment
  process.
• Identify opportunities to improve the
  acquisition/payment process and IT applications.

3
Strategy and Scope

• To provide needed resources for the
  organizations conversion processes when they are
  needed. This can be broken into several
  sub-objectives
• Purchase items from reliable vendors.
• Purchase high quality items, or at least items of
  the desired quality.
• Obtain the desired items at the best possible
  price.
• Purchase only those items that are properly
  authorized and are for legitimate company
  purposes.
• Have resources available and in useful condition
  when they are needed by the company.
• Receive only those items ordered, and receive all
  the items ordered.
• Control items received so they are not lost,
  stolen, or broken.
• Pay for the items received in a timely manner to
  the appropriate party.

4
Overview of Acquisition/Payment Process

• Request for goods/services (monitor need) event
• Authorize purchase event
• Purchase good/service event
• Receive goods/services event
• Disburse cash event
• Purchase return event

5
Traditional Automated Acquisition/Payment Process
Flowchart - Part 1
Inventory master file
May be done at time of updating
Initiate purchases
Step 1 - Extract data and print report
Inventory reorder list
Supplier reference history file
Supplier evaulation data display
Select supplier note on list
Inventory reorder list
Performed by purchasing department buyers
Enter purchase order data
A
6
Traditional Automated Acquisition/Payment Process
Flowchart - Part 1
Exception and error display
Step 2 - Edit purchase order data store in file
A
Purchase transaction data
Supplier master file
Inventory master file
Step 3 - Update files print updates
Open purchase order file
Listing of purchase orders
Purchase orders
Inventory status report
Printed at end of day
Review and sign
Performed by purchasing manager
To purchasing manager
To inventory manager
To supplier
7
Traditional Automated Acquisition/Payment Process
Flowchart - Part 2
Count inspect received items compare to
packing slip
Initiate supplier
Packing slip
Performed by receiving clerk
Enter receipt on CRT terminal
Open purchase order file
Edit receipt data prepare receiving report
Exception and error display
B
8
Traditional Automated Acquisition/Payment Process
Flowchart - Part 2
B
Receipt transaction
Receiving report
Inventory master file
To stores accounts payable
Supplier history file
Update master files
Open purchase order file
Receiving report file
Back-order file
To supplier
9
Traditional Automated Acquisition/Payment Process
Flowchart - Part 3
Suppliers invoice
From suppliers
Receiving reports
Receiving report
Batch total
Performed by accounts payable clerk
Verify check prepare batch total
Exception and error display
Suppliers invoice
Enter invoiced amounts total
Open purchase order file
Edit entered data
Suppliers invoice
D
Receiving report
Unpaid vouchers
Approve for payment
C
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Traditional Automated Acquisition/Payment Process
Flowchart - Part 3
D
Payables data from invoices
Stored until end of day
Supplier accounts payable master file
Supplier history file
Update payables other files prepare vouchers
Open purchase orders file
General Ledger
Voucher registry summary
Open vouchers file
Disbursement voucher
Display of batch totals errors
C
To cost control or other resource management
department
To accounts payable department
To report preparation procedure
To accounting clerk
11
Traditional Automated Acquisition/Payment Process
Flowchart - Part 4
Disbursement vouchers
From accounts payable procedure
Batch total
Prepare batch total
Disbursement vouchers
Vouchers file
Exception summary report
Key-to-disk and edit
Disbursement data
A similar report is an output of each computer run
Run 1 - Sort by supplier account number
A
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Traditional Automated Acquisition/Payment Process
Flowchart - Part 4
Sorted disbursement data
Open vouchers file
A
Run 1 - Update accounts payable file print
checks other outputs
Supplier disbursement payables master file
Supplier history file
Vouchers file
Checks
(with vouchers)
Summary of cash disbursements
Journal voucher transaction file
Check number
Review and sign
Disbursement vouchers
To financial management
To cash disbursements
To general ledger procedure
To suppliers
13
(No Transcript)
14
Traditional Reimbursement Process
15
IBMs NEDS (National Employee Disbursement
Solution)
Reporting Facility
Business- Event Processor (business
and information process rules)
Business Data Repository
Management approvals
EFT Employee deposit
Travel information
Impact 393 headcount reduction 291 million
savings (10 years) Decreased processing
time Increased controls Better management
information New role for the accountant
16
Christopher, Inc. Aquisition/Payment REAL Model
Authorizing Agent
(1,1)
Order Request Review
(0,)
(0,)
Inventory Clerk
(1,1)
(0,)
(1,1)
(0,)
Purchasing Clerk
(1,1)
(0,)
Order Goods from Vendor
(0,)
(1,)
(0,)
(1,1)
(1,)
(1,1)
Inventory
Vendor
(0,)
(1,)
(1,1)
(1,1)
(1,)
(0,)
Receiving Clerk
(1,1)
(0,)
(0,)
Receive Goods
(0,)
(1,1)
(0,)
Warehouse Clerk
(0,)
(1,)
(1,1)
Accounts Payable Clerk
(0,)
(1,1)
(0,)
(1,1)
(0,)
Disburse Payment
(1,1)
Cash
Bank
(0,)
(1,1)
(0,)
(0,)
Cashier
17
EDI ELECTRONIC DATA FLOWS
SELLER (REVENUE CYCLE)
CUSTOMER (PURCHASES CYCLE)
Internal Data Flows
Internal Data Flows
External Data Flows
External Data Flows
18
Acquisitions/Payment Process Sample Information
Customers
Top Management Purchasing Personnel Receiving
Clerks Accounting Treasury and Finance Vendors
19
Christopher, Inc. Acquisition/Payment Process
20
Christopher, Inc. Acquisition/Payment Process