Accounting Information Systems, 9e Gelinas ►Dull ► Wheeler Chapter 11: The Billing/Accounts Receivable/Cash Receipts (B/AR/CR) Process Accounting Information Systems, 9e Gelinas ►Dull ► Wheeler © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Order entry/sales (OE/S) Process Manual: Requires paper work  time consuming Cost $60 to $200 Easy to make errors  increase cost Computerized Speed up process  less time consuming Save 70 percent of cost ($18 to $60) Not just less errors but provide essential and value added information (essential in information age)

Order entry/sales (OE/S) process The order entry/sales (OE/S) process includes the first four steps in the order-to-cash process. pre-sales activities sales order processing picking and packing the goods shipping Billing and processing the customer payment, are included in the billing/accounts receivable/cash receipts (B/AR/CR) process.

Process Definition and Functions Order entry/sales (OE/S) process: an interacting structure of people, equipment, activities, and controls that is designed to achieve certain goals. The primary function of the OE/S process is to create information flows that support the following: Repetitive work routines of the sales order department, credit department, and shipping department by capturing, recording, and commutating sales related data. Support decision needs of those who manage various sales and marketing functions.

Horizontal View of the OE/S Process

Description of Horizontal Information Flows

Vertical Perspective of the OE/S Process: key players involved in MKTG function

The OE/S Process – Context Diagram

OE/S Process–Level 0 Diagram Better idea to name data flow between process and data store Match goods with picking ticket Enter quantity picked

Rules in DFD Building ... Rule 4 : Shaded corner must appear in ALL occurrences of a duplicated symbol in a same diagram CUSTOMER D3 Accounts Receivable CUSTOMER D3 Accounts Receivable

The OE/S Process–Diagram 1 Purchasing Dept.

OE/S Process–Level 0 Diagram Better idea to name data flow between process and data store Match goods with picking ticket Enter quantity picked

SAP Sales Order Inquiry Screen

The OE/S Process—Diagram 2 Reject: (1) products pulled from the shelf may not be those indicated on the picking ticket (2) no sufficient products to satisfy the request

OE/S Process–Level 0 Diagram Better idea to name data flow between process and data store Match goods with picking ticket Enter quantity picked

The OE/S Process—Diagram 3

OE/S Data Stores Customer master data: record of every authorized, regular customer. Inventory master data: record of each item that is stocked in the warehouse or regularly ordered from a vendor. Marketing data: repository of a variety of sales- oriented data from presales or sales activities. Sales order master data: created on completion of a sales order and updated when goods have been shipped.

Entity-Relationship (E-R) Diagram for the OE/S Process

Selected Relational Tables (Partial) for the OE/S Process

Billing/accounts receivable/cash receipts (B/AR/CR) process The billing/accounts receivable/cash receipts (B/AR/CR) process is an interacting structure of people, equipment, activities, and controls designed to create information flows and records that accomplish the following: Support the repetitive work routines of the cashier, and the credit and accounts receivable departments. Support the problem-solving processes of financial managers. Assist in the preparation of internal and external reports.

OE/S vs. B/AR/CR OE/S Processing customer order Shipping products to customer B/AR/CR: complete the order-to-cash process by accomplishing: Billing customer Managing customer accounts Securing and recording payment for products/service sold

Horizontal View of the B/AR/CR Process

Description of Horizontal Information Flows

Optimizing Cash Resources Having the B/AR/CR process produce invoices automatically helps ensure that invoices are sent to customers shortly after the goods have been shipped. Treasurer’s goal: make funds available to acquire assets, make investments, or reduce interest charges. Billing’s goal: get invoices to customers quickly, hopefully reducing the time it then takes to obtain customer payments.

B/AR/CR–Context Diagram

B/AR/CR–Level 0 Diagram Better idea to name data flow between process and data store

B/AR/CR Process–Diagram 1

Perform Billing Major output of the billing process is the invoice, a business document used to notify the customer of an obligation to pay the seller for the merchandise (or service) ordered and shipped (or provided, if a service).

Sample SAP Invoice Data Screen

B/AR/CR Process–Diagram 2

B/AR/CR–Level 0 Diagram Better idea to name data flow between process and data store

Sample Accounts Receivable Aging Report

B/AR/CR Process–Diagram 3

B/AR/CR–Level 0 Diagram Better idea to name data flow between process and data store

B/AR/CR Logical Data Descriptions Accounts receivable master data: Repository of all unpaid invoices issued by an organization and awaiting final disposition. Two types of accounts receivable systems exist: Balance-forward Open-item

B/AR/CR Event Data Stores Sales event data store: invoice (sales) records. Is a sales journal in a manual process. Accounts receivable adjustments events data store: records from sales returns, bad debit write-offs, estimated doubtful accounts, etc. Cash receipts event data store: details of customer payments.

E-R Diagram (Partial) for the B/AR/CR Process

Selected Relational Tables (Partial) for the B/AR/CR Process

Selected Relational Tables (Partial) for the B/AR/CR Process (cont’d)