Cost Management Systems

1
AGENDA

• Today-
• Revenue cycle business activities
• Revenue cycle ER diagram
• Controls in revenue cycle

2
Overview

• Here we deal with customer relationship
  management process (CRM).
• We focus on order management and account
  management.

3
Customer Order Management Process

• The customer order management business process
  includes the following activities
• inquiry (optional)
• contract creation (optional)
• order entry
• shipping
• billing

4
Activities in Customer Order Management Process
Order Entry
Optional Steps
Inquiry
Shipping
Contract Creation
Billing
5
Edit Checks When Entering Data

• Validity Check
• Customer account Inventory Item
• Field checks
• Numeric text fields
• Reasonableness test
• Quantity amount
• Range checks
• Delivery date
• Completeness Check
• All appropriate data items

6
Types of Billing

• Prebilling
• Invoices are prepared as soon as the order is
  approved(but not sent).
• The inventory account receivable and GL files are
  updated at this point.
• Postbilling
• Invoices are prepared after the confirmation that
  order is shipped.

7
Customer Account Management Business Process

• The customer account management business process
  includes accounts receivable processing through
  the collection of customer payments on account.
• Accounts receivable often represents the majority
  of an organizations working capital.

8
Customer Account Management Business Process

• Accounts receivable also maintains customer
  credit and payment history information.
• This information is essential in the customer
  order management business process.
• The accounts receivable procedure is
  straightforward.

9
Write-Off Accounts Receivable

• A separation of functions is essential in a
  business process to write off accounts
  receivable.
• The basic feature in a write-off process is
  an analysis of past-due accounts.
• This is usually done with an aged trial balance
  report.

10
Control Objectives

• All transactions are properly Authorized
• All recorded transactions are valid
• All valid,authorized transaction are recorded
• All transactions are recorded accurately
• Assets are safeguarded from Loss of theft
• Business activities are performed efficiently and
  effectively.

11
Information Needs

• Basic Operational information needs
• Respond to customer inquiries
• Decide whether to extend credit to a particular
  customer.
• Determine inventory availability
• Decide what type of credit terms to offer
• Set prices for products and services. Set
  policies regarding sales return and warranties
• Select methods for delivering merchandise.

12
Information Needs

• Information for Strategic Performance
  evaluation
• Response time to customer inquiries
• Time required for order fulfillment
• Service level, of back orders
• Customer satisfaction, market share sales trend
• Profitability analysis by product customer etc
• Sales staff performance.
• Bad debt expense credit policies
• Inventory turn over.