1. Flow of financial docs between businesses

2. Order of financial docs
Purchase order
delivery note
Goods received note
Invoice
Credit note
Statement of account
Remittance advice slip
Cheque
receipt

3. Purchase order
If you place an order for a new office chair then a purchase order would need to be completed
I.e. purchase orders are made out when one business orders from another
Purchase orders need to be checked for accuracy

4. example Complete the purchase order with these details:
you work for Mouse Matters
You order 200 sq metres of blue mouse cloth, 20 m of black mouse cloth and 50 m of 2mm vinyl sheet
Item codes are MC03, MC04 and V07 respectively
Prices are £5.50, £5.50 and £6.60 respectively
Ordering from Universal Fabrics, 4-10 Dickenson St, Battersea, London, SW11 ORT
Order No is 2003/707
Supplier No is 97
Delivery is one week today
I will sign as purchasing officer!!

5. questions What happens if the following errors are present?
The suppliers post code is wrong
Suppliers name and address is wrong
Description of material is right but code is wrong
Price on the order is 2 less per item than stated in supplier’s price list
The form is not signed

6. Delivery note
Produced by suppliers of the goods and sent to the business customer with the goods
After goods arrive, a staff member checks them and signs two copies of the delivery note
One is kept and one returned to the supplier
A signed delivery note means that everything is in order and the invoice can be sent
If a large business uses its own specialist company to deliver goods the delivery note is known as an advice note

7. example
You must now complete the delivery note using the information from the purchase order
Make sure you copy the order no correctly
Likewise the customer no and address
Also check item code and quantity

8. Goods received note Each time an order is unpacked and checked
a goods received note is filled in as a double check (may be because in first instance the delivery note was signed by reception)
records what was delivered, when and by whom
Needed by accounts to check details on invoice
If there any differences or discrepancies the supplier is contacted immediately

9. exercise
In groups of four discus the following and come to a group decision:
What action would be taken if each of these occurred:
Ten boxes of paper were crushed and damaged in transit
Pink paper ordered instead of white
The order stated 50 folders but 500 were delivered
Only 15 ink cartridges were delivered instead of 20

10. invoice
Sent form supplier to customer for payment for goods which have been delivered
Prices added together to give total amount owing
VAT will be calculated and added
Obviously need to be checked for errors

11. example
Calculate the total invoice amount for mouse matters from universal fabrics given that VAT is 17.5%
Fill in the blank invoice provided

12. Credit note Used if customer overcharged or if goods are faulty
Also used if wrong goods sent or the wrong amount sent
Sometimes more may have been ordered than necessary. If the supplier agrees to take these back then a credit note can be used

13. Statement of account
Statements of account list or detail the transactions between two companies
Usually sent out each month to all customers who owe money
Three columns – the debit column shows amounts owed by the customer, the credit column shows amounts paid by the customer, the running balance column is calculated after each transaction

14. Remittance advice slip
Sent attached to the statement of account
Divided by a perforated line so can be detached and sent back with cheque
Obviously details should be checked on remittance advice with those on the statement of account
Final details should be checked to tally with cheque written

15. cheque
Cheques are a convenient way of paying for large business transactions
Also more secure than large amounts of cash
Complete the blank cheque for the amount detailed on the statement of account for mouse matters i.e. for £
Common mistakes include: date incorrect, not signed, difference between amount written in words and numbers, alteration on cheque
Minor alterations an be initialled

16. receipt When cash is used a receipt will normally be issued
Provides proof of purchase and allows for staff reimbursement
Also provides details of VAT paid
Two copies issued – one to customer, the other retained but the business
Contains date, ref no, amount paid for each good, total and VAT added.

17. Computerised systems: advantages
Quick – instant in most cases
Automatic
Fewer mistakes
Can chase up unpaid bills more easily
No docs to lose
Linked to other systems
Can search customers easily
Account nos allocated automatically
More secure?

18. Computerised systems: disadvantages
Cost – can be expensive
Input of data
Staff training
Hardware/computer failure
Input errors – can be difficult to spot
Can be inflexible