KIRLOSKAR INSTITUTE OF ADVANCED MANAGEMENT STUDIES

AYUSH AGARWAL, ROLL NO. 24, BATCH 14

October 20

2012
OIT PROCESSES

PROCESS ACCOUNTS RECEIVABLE (AR) PURPOSE This process is used to facilitate credit sales i.e. the debtors that owe money to the company. These are the customers to the company and hence maintaining proper receivables account is very important. Defining this process is very important as this encompasses the working capital of the company which is critical for the viability of a company. Moreover this process also helps the company the track the pending records of the customers there by regulate sales so as to maintain an optimum credit level beneficial to both the company and its customer. PLACE This process will be carried out under the Finance department in the accounts section. TIME This process is executed immediately as soon as the sales bill is generated for a customer and his account is credited if the goods are sold not for cash, thereby showing the customer as accounts receivables. When the customer makes the payment against the goods sold, simultaneously this process is again initiated and entry of money being received is made against the customers account there reducing the receivables. RESPONSIBLE Here the responsible lies with the head accountant who needs to ensure that entry for both the sales invoice and money received is made but it is also the duty of the sales department to keep an eye over the entries being made because any mistake on part of the accounts department, its the sales department who has to bear the brunt and it also further leads to lower service levels and thereby dissatisfaction with respect to its customers.

STEPS
FIND SALES INVOICE

SALES INVOICE

RECEIVE/ MAKE PAYMENT

RECEIVE PAYMENT

RECORD DEPOSIT

RECONCILE
MAKE PAYMENT RECORD WITHDRAWL

FIND PURCHASE INVOICE

BANK STATEMENT / PETTY ASH PURCHASE INVOICE

TOOLS & EQUIPMENT In order to facilitate this process and ensure integration a well developed ERP system should be in process which eliminates the dependency on the accounts department. As the sales invoice is generated by the sales department the account of that customer should be debited immediately and as the cashier receives the money, the entry passed by him should credit his account thereby bringing in real time entry and reducing errors to the minimum. Moreover proper training should be also in place thereby making the personnels acquainted with the technology and consequences that can erupt because of negligence or carelessness. FREQUENCY Its a high frequency activity as it entails regular entry and is proportionate to the number of customers and sales per day. OUTPUT Output of this process is accurate information about the customer, amount due by him, sales made to him, type of goods sold, when and where. Moreover it also helps to know the credit history of a client who has been associated for a very long time and most important of all increases the visibility with respect to amount of goods sold on credit and facilitates the organisation in determining policies w.r.t. credit sales. PERFORMANCE MEASURE The performance measure for this will be to check the time gap between goods sold and entry made. The lower the time gap shows high level of integration. Moreover lower the errors made while feeding in the data will also highlight quality of work as wrong data will not be of any use and lastly how fast can it give output or data as and when required by various departments w.r.t. a client.

RISK FACTORS Here the risk factor is not very high and what so little may only occur because of human error. This risk can be mitigated by proper training and not overburdening the personnel with excess work thereby motivating him for errors. CONTINUOUS IMPROVEMENT Improvement can be made in the output as the data required can be brought down to the level which is actually required by the various departments. It being a highly repetitive clerical job supported by state of art software requires less focus on making entries as improvement area. CUSTOMER PROCESS This process is meant to support the sales department but can also be useful to customers when they want to know the status of their account and thereby take necessary action to make adjustments to meet the policies of the company.