1. Customer Order and
Account Management
Business Processes
Chapter 7

2. Describe the customer order management business process.
Learning Objective 1
Describe the customer order
management business process.

3. Customer Order Management Business Process
Inquiry (optional)
Contract creation (optional)
Order entry
Shipping
Billing

4. Customer Order Management Business Process
Contract
creation
Inquiry
Optional
Steps
Order
entry
Shipping
Billing

5. Enterprise Resource Planning
ERPs are information systems capable
of storing and processing information
pertaining to the customer order
management business process.
What is SAP R/3?
It is a registered trademark. (

6. Enterprise Resource Planning
SAP R/3 stores and processes data
related to the customer order
management business process.
The customer order management
business process is part of SAP’s
sales and distribution module.

7. Customer Master Records
These records have to be created before
processing sales orders.
SAP R/3 requires four types of master records:
1. Sold-to customer
3. Ship-to customer
4. Bill-to customer
4. Payee customer

8. Customer Master Records
When a new sold-to-customer master
record is created, the other three master
records are automatically created.
Customer master records should be unique.
SAP R/3 requires that a customer
has been approved for sales prior
to the creation of master records.

9. Data Fields Customer master records are created
by inputting information into R/3.
R/3 guides the input process by
displaying a series of customer
screens on a video monitor.
Each screen collects a category of data.
What are these Create Customer screens?

10. Data Fields Initial screen Customer address Control data Marketing
Payment transactions
Unloading points

11. Data Fields Foreign trade Contact person Account management
Payment transaction
Correspondence
Insurance

12. Data Fields
Sales
Shipping
Billing
Taxes
Output
Partner functions

13. One-time Customers R/3 allows for the creation
of a single master record
“dummy” for a one-time
or infrequent customers.

14. Standard Order Processing in SAP R/3
Standard order processing describes the
customer order management business
process in which customer orders are
filled from an inventory of finished goods.
A customer master record has to exist
before a sales order can be created.

15. Illustrate controls that apply to order processing.
Learning Objective 2
Illustrate controls that
apply to order processing.

16. Order Entry Customer Enter order order Create order Sales order
Master price list
Order database
Sales
order

17. Credit Sales order Approve credit Credit processing Retrieve
Credit files
Approved
order
released
for further
processing
Credit
processing
Order
database
Retrieve
new orders
Approved
sales order

18. Finished Goods Picking list Pick order Delivery processing Prepare
Inventory
database
Delivery
processing
Order
database
Prepare
picking list
Picking list
with goods
To shipping

19. Shipping Picking list with goods Packing List Match ship order
Finished
goods
Picking list
with goods
Packing
List
Match ship
order
Delivery
processing
Order
database
Packing list
with goods
Bill of
lading
Customer

20. Billing Billing Prepare list invoice Invoice Invoice processing
Customer
Billing
list
Prepare
invoice
Invoice
processing
Order
database
Invoice
Prepare
journal
entry
Periodically
Journal
voucher
General
ledger

21. Describe the customer account management business process.
Learning Objective 3
Describe the customer account
management business process.

22. Customer Account Management Business Process
The customer account management
business process includes accounts
receivable processing through
the collection of customer
payments on account.

23. 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.

24. Customer Account Management Business Process
A subsidiary ledger of individual
accounts is maintained, with a
control account in the general ledger.
Remittance advices are routed
from the cash receipts functions.
Credit memos and other invoice adjustments
are routed from the billing department.

25. Customer Account Management Business Process
There are two basic approaches to
an accounts receivable application.
What are these approaches?
1. Open-item processing
2. Balance-forward processing

26. Illustrate controls that apply to accounts receivable processing.
Learning Objective 4
Illustrate controls that apply to
accounts receivable processing.

27. Controls in the Accounts Receivable Business Process
Cash
Receipts
Customer
Receiving
General
Ledger
Returned
goods
Remittance
advices
Control
total
Post

28. Controls in the Accounts Receivable Business Process
Receiving
Credit
Billing
Accounts
Receivable
General
Ledger
Invoices
Control
totals
Sales return
memo
Independent
count
Approve
sales return
Journal
voucher
Sales return
memo

29. Controls in the Accounts Receivable Business Process
Customer
Credit
Billing
Accounts
Receivable
Aged trial
balance
Periodic
processing
Credit
memo
Post
Statements

30. 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.

31. Write-Off Accounts Receivable
General
Ledger
Accounts
Receivable
Treasurer
Credit
Internal
Audit
Aged trial
balance
Control
total of
write-offs
Write-off
memo 1
Write-off
memo 1
Write-off
memo 1 2 3
Write-off
memo 3
File
Worthless
account list
Confirmation of write-off sent to customer

32. Cash-Received-On-Account Business Process
A cash-received-on-account business
process is used when there is an
existing customer account balance.
Cash received on account typically
comes into a business through the
mail or is paid in person to a
central cashier or a cash window.

33. Cash-Received-On-Account Business Process
Customer payments should
always be acknowledged.
The recorded receivable that exists
prior to the payment enhances
control over payments received.

34. Cash-Received-On-Account Business Process
The major control feature of cash-received-
on-account business process is the
separation of the following functions:
Mailroom
Cash receipts
Accounts receivable
General ledger
Bank
Internal audit

35. Lock-Box Collection Systems
What is float?
It is the time between the signing of the
payment check by the customer and the
moment the firm has use of the funds.
A lock-box system reduces the float by
having the checks deposited to a firm’s
account before the firm processes them.

36. Cash Sales Business Process
The significant difference between a cash
sales business process and a cash-received-
on-account business process is that there
is no previous asset record in a cash
sales business process.
Cash sales are recorded in a cash register or
other secure device to provide documentation.

37. Cash Sales Business Process
What is customer audit?
It is a general term used to describe
procedures in which the customer
acts as a control over the initial
documentation of a transaction.

38. Cash Sales Business Process
What are some of these procedures?
Pricing in such a way that
the customer expects change
Awarding a customer free
items if the receipt has a mark

39. End of Chapter 7