Control Points
Posted by Steven in A/R Posting, Balances, Control Points, Credit Entries, Invoice promptly, Ledger Agreement, Reports On Receivables
There are two ways of managing the A/R one is the manual one and other one is the automated, both manual and the automated A/R Systems have Six Control Points that will help the A/R accounting on track. The six control points are explained as follows Verify All A/R Balances –no matter what your system, transaction accounting must include enough information to allow verification of the transaction. That may mean including the same or all of the following documentation, all of which must be a verifiable through the customer account records.Invoice promptly - Nothing can bring greater joy or sorrow to a business than good or bad invoicing habits. Immediate invoicing exhibits good records management and fiscal reliability. Late invoicing does little more than delay payment, hurt the company’s financial position, and perhaps even create difficulties for customers who no longer can or want to pay.A/R Posting – Any good receivable system will provide the proof that all invoices have been correctly posted to the customer accounts. This is usually accomplished daily by comparing invoices with the A/R postings.Reports On Receivables – A good Automated system provides regular reports on the state of the accounts, identifying delinquent customers and those that have purchased over their credit line. The system will indicate how many accounts have aged and how much it is.Credit Entries – There are only three ways accounts may be credited which are payment, credit memo and journal entry. Payment is the most common of course. But any system must have a method to address amounts in dispute, returned items and errors that’s the job of credit memos and to write off accounts that are considered uncollectible.Ledger Agreement - An A/R system isn’t a system unless there’s agreement among the sub ledger balances, the general ledger accounts receivable balance, and detailed customer transaction records. Balancing these accounts should be among your systems routine procedure
