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Billing statement of account sample for Management

welcome remember our friend Billy cash well today he's going to help us learn about billing and cash collections in this video we'll talk about the processes threats and controls for both of these parts to the revenue cycle so let's talk about the process first let's say that Jen receives a sales order from the sales order entry process along with a packing slip and Bill of Ling from Shipping Jen uses these to create an invoice which is then sent to the customer she will then record the sale in the sales journal and update the accounts receivable for this [Music] customer at the end of the month Jen takes this information and drafts up a monthly statement that is also sent to the customer the cash for this sale is then collected when the customer pays this invoice after the payment comes in it is recorded on the remittance list and the payment is deposited in the bank the remittance list is then sent over to accounts receivable where Jen Updates this company's accounts receivable and then files away the remittance list a quick side note there are two ways companies can build customers they can use either an open invoice method or a bounce forward method using the open invoice method company a sends an invoice to Company B Company B processes the invoice and sends company a their payment so it's a one payment to one invoice method using the balance for method company a would send several invoices over a period of time and then send a monthly statement to Company B Company B would process all of these and make one payment to company a so here the method is one payment to many invoices now that we've gone over the process let's talk about the threats that can occur during biling and cash collections threats for billing are a failure to Bill billing errors posting errors in accounts receivable and inaccurate or invalid credit memos a failure to Bill means that our customer never gets their invoice for billing errors a customer could be build the wrong amount based on the quantity ordered and for posting errors in accounts receivable well it's just that errors are posted in accounts receivable with inaccurate or invalid credit memos a customer should who should receive a $10,000 credit based on return Goods could be given something like a h 100,000 of credit now let's move over to cash collections the threats here are the theft of cash and cash flow problems a payment may come in but it ends up in our employees pocket instead of our bank account and problems with cash flow mean that payments aren't coming in on a regular basis now that we've reviewed the threats to the these processes we'll talk about the controls to mitigate each of these threats to address a failure to Bill we should separate billing and shipping functions we can also compare our invoice against a corresponding sales order picking ticket and shipping documents so you can separate billing and shipping functions and periodically reconcile invoices with sales orders and shipping documents to address billing errors we can use data entry controls we can also Auto increment the amount Due based on price pricing data saved in the system so so we can use data entry controls and automatically enter pricing data for posting errors in accounts receivable we can also use data entry controls thus we can only allow the proper data to be entered into any of these fields sending monthly statements to our customers also addresses this threat along with comparing what's in our accounts receivable against our batch totals and subsidiary accounts so we can use data entry controls send out a monthly statement to our customers and compare our accounts receivable with batch totals and subsidiary accounts for inaccurate or invalid credit memos we can separate credit memo author authorization from sales order entry and customer account maintenance we can also configure our system to block any credit memos that don't have the corresponding documentation so we can use segregation of Duties and correctly configure our Erp system for cash collections we can separate our cash handling functions from our accounts receivable and our authorization of credit memos we can also reconcile what's in the bank with what we have on record theft of cash can also be deterred by using a lockbox electronic funds transfer and financial electronic data interchange additionally we can have two people open all mail and we can deposit our cash on a daily basis so we can separate our cash handling function reconcile what's in the bank with our records use lockboxes EFT and fed have two people open all mail and deposit cash daily well that's it congratulations for mastering the revenue cycle it sure has been fun