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The Revenue Cycle:

CASH RECEIPTS SYSTEM


FLOWCHART

PJH Lending Group


Local Business

Address: Unit 501, 5th floor, Imperial Bldg., Velez St.,


Cagayan De Oro City

Submitted by:

Ejem, Shyrine V.

II- BSAC (ACB)

Submitted to:
Mr. Abel Nicolo L. Yu, CPA, MBA, REB

March 18, 2020


Cash Receipts System Flowchart

I. Original Flowchart

Telecollector Receiver Cashier


II. Revised Flowchart

SAP FICO
Financial Accounting &
Controlling
Summary of the Revised Flowchart

In the revised flowchart, it can be observed that the number of departments increased from
3 to 5 such that Accounting department and Staff were added to effectively manage the controls
of Cash Receipts System or simply collecting the payments from lenders. The following are
revisions which were considered thoroughly:

a. Addition of Accounting Department


-Given any circumstances, cash is always considered the number one susceptible
to fraud considering the nature of the business which revolves to money matters. It
is therefore important that an Accounting department is added so that the risk of
fraud involving cash such as theft will be mitigated.

-Instead of assigning the receiver to reconcile and input the amounts of money
collected, the right person which will hold such responsible is an accountant. The
accountant whose responsibility and code of ethics are known to him/her, it is safe
to say that such accountant will properly do the job objectively and free from bias.

b. Staff
- One problem observed during the interview was the lack of employee who will
deposit the money collected in various banks wherein such money is then given
to various employee who are available at the time the money is ready for
deposit. Such person can be a guard which will lead to a conclusion that if this
kind of system will continue then there will be high probability of risk
concerning cash in the company.

- The qualifications of such staff must therefore be screened properly so that there
will be no problem in the long-run. Importantly consider his or her various
backgrounds to ensure that the money collected is in safe hands.

Importance of the Revisions

The nature of the business involves around cash; lending huge amount of money to
overseas filipino workers and recognizing revenues through collection of payments. Thus, such
company has high risk to be involved in theft incidents or even worse, fraud possibly done by
employees themselves. Such risk needs to have a better and effective controls which can then
prevent unexpected twist and turns. To have an effective internal control that is implemented and
applied by each person in the company, additional measures are needed to ensure the safety of
cash.

To ensure that cash collected is accurately deposited in a bank, there should be necessary
steps to follow by those assigned employees in each department. This will be achieved through
proper monitoring by the manager given the fact that the transaction entails various background
stories of overseas filipino workers, therefore, cash must be handled securely. If possible, in the
cashier and telecollector area, must be CCTVs to record the ongoing work.
Integration of SAP Module

One of the SAP Modules that the company can benefit in using is the SAP FICO. It is a
module used for financial reporting both externally and internally. The objective is to record all
financial transactions that are posted by an entity and produce financial statements that are accurate
at the end of the trading period. SAP FI is made up of sub modules which are the following:

The following are significant in the Cash


Receipts System:

1. General ledger accounting

All general ledger accounts that are


used for reporting are managed through
general ledger accounting. Most of the
transactions are recorded in sub modules and
they are reconciled with the general ledgers in
real time. Transactions that can be done in
direct in general ledger Accounting include
journal vouchers which are posted to adjust or
correct transactions.

2. Accounts receivables

It is a sub module that captures all transactions with customers and manages customer
accounts. Separate customer accounts will be maintained and when transactions are posted in
customer accounts, reconciliation accounts in general ledger are updated with the figures in real
time. Transactions in accounts receivables include invoice posting, credit memo posting, down
payments, invoice payment, dunning and executing customer reports.

3. Bank accounting

Bank accounting captures all transactions with the banks. Bank reconciliation is done to
reconcile all transactions recorded on bank statements comparing them to transactions in the
system.

Explanation:

The company is currently using Excel Application to manually input the amounts and
update financial information. Considering the nature of the business and the number of lenders and
potential clients everyday, it is a must to integrate a systematic and automatic way of updating the
data especially when recognizing cash receipts from lenders. Additionally, given the fact that the
company is booming and expanding nationwide, it is applicable for SAP FICO to be implemented
and be used so that the work of the accountant will be fast-tracked, efficient, and will produce
high-quality and error-free information of the client’s payables. Since the company is established
many years ago already, it is now time for a change, a change that will effectively manage the cash
flow in Cash Receipts Cycle.

The benefit of purchasing SAP cannot be ignored when all SAP FI sub-modules integrated
and transactions are updated in real time which means accurate financial statements can be
extracted from the system at any time. Such sub modules are interlinked and integrate in real time.
A trial balance can be extracted at any time and it will always balance because all the sub modules
are connected.

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