When product has been shipped to customers, proper paperwork and computer transactions have been completed by shipping staffs, financial and accounting staffs then would take care of the next process to ensure that products are shipped directly to customers from suppliers, and that the company properly bills and invoices customers for these deliveries. There are still huge tasks to do along the process until the payment [cash] is received in the company’s bank account. This post aids the accounting staff with a clear navigation and direction to complete their task in billing and invoicing roles by performing the following step-by-step procedures: Entering Billing in Computer, Issuing Recurring Invoices, Printing and Issuing Invoice, Receiving and Depositing Cash, Processing Credit Card Receipts, Applying Cash to Accounts Receivable, and Reviewing Unapplied Cash.
Obviously, these procedures by no meant perfect. It is proposed to become a general guideline and procedure example that maybe perfect when it is well adapted to the nature of the company’s operation, the business lines, company scale, and more importantly to the existing financial information system [particularly the accounting system]. It is [I am] open for some more applicable suggestions, or thoughts and any other of knowledge [experience] that will deliver more value to readers of this site. So, please feel free to post your thoughts on the comment form at the bottom of this article.
Entering Billing in Computer
This procedure is used by the accounts receivable clerk to complete daily billings to customers.
Step-1: Shipping Paperwork – Find the shipping paperwork in the “shippers” box in the mail room. The paperwork should include a handwritten shipping log, as well as white and green copies of the bills of lading. Separate these documents into different piles.
Step-2: Verify Bills of Lading [or Air Way Bill for air shipment] – Verify that there is a bill of lading for every order listed on the shipping log, and also that all bills of lading are listed on the log. Then put the bills of lading in order, first by customer number and then by order number (if there is more than one order per customer). Next, check the “carrier” column of the shipping log. Most orders will have “Customer Pickup” listed next to them. Any accompanying freight sheet is filled out by the shipping department. These are usually turned in ahead of time and kept in a file. Pull out the appropriate sheets, because they are needed for invoicing.
Step-3: Review Freight Sheets – Review the freight sheets. If the bill of lading reads “Packing List” on the top, the order has already been picked by the shipping department. If it reads “Customer Order Pick list” and the shipment quantities are handwritten in the blanks, the order still must be picked. To pick an order, go to SHIP in the software, enter the issue type, and then enter the customer number. If the quantity showing on the screen for an item matches the quantity handwritten in the bill of lading, press ENTER to pick that item. If the quantities differ, type the handwritten quantity into the order and press ENTER. Pick all of the items on the order, and then proceed to the next order.
Step-4: List All Picked Orders – The resulting list should include all the orders in the stack, plus any orders shipped out today. In this step, go through the list and choose only those orders that were shipped the previous day and for which there are bills of lading.
It may be difficult to determine the order numbers for some shipments, because there may be more than one sequence number for the same customer order number. You may need to look at all of the orders with a particular order number to find the correct one. To pick one, make sure the item numbers and quantities match the bill of lading.
Step-5: Check Pricing – Check the pricing for each order and verify that there is a charge for pallets and shipping. Enter the customer order number and sequence number to check prices. Each customer has a price sheet in the price book that lists current prices for all of the items it orders. The price sheet will also tell you whether or not to charge that customer for pallets. This is also where the freight sheet is used. Check the freight code on the order and make sure that it matches what the shipping department has written on the freight sheet. If the code is “prepaid,” do not charge the customer for freight. If it is “prepay and add,” you must add the amount on the freight sheet to the invoice. If the order was sent collect, there will be no freight sheet, because the customer is arranging and paying for its own freight.
The next process is “recurring invoices issuance” Read on….
Issue Recurring Invoices
This procedure is used by the billing staff to issue recurring invoices near month-end, for goods or services provided during the following month.
Step-1: Print Billing Report [by Account Receivable Clerk]
(1). Two weeks prior to month-end, print two copies of the Recurring Invoices report for the following month.
(2). Forward a copy to the sales manager and pricing clerk, with a request for them to note any corrections directly on the report and then return it to the accounts receivable clerk.
Step-2: Verify Pricing [by The Pricing Clerk]
(1). Verify the accuracy of all product or service prices listed on the report. Note changes directly on the report.
(2). Return the report to the accounts receivable clerk.
Step-3: Verify Contact Information [by Sales Staff]
(1). Verify the accuracy of all contact information listed on the report. Note changes directly on the report.
(2). Note changes to recurring goods or services on the report. If a customer has canceled further activity, cross out the customer.
(3). Return the report to the accounts receivable clerk.
Step-4: Correct and Issue Invoices [by Account Receivable Clerk]. To complete this step, the account receivable clerk would need to perform the following task:
(1). Upon receipt of the corrected reports, enter all changes noted by the pricing clerk and sales staff in the computer system.
(2). Reprint the Recurring Invoices report and verify that all corrections have been made.
(3). Reset the date of the accounting software to the first day of the following month.
(4). Use Procedure BIL-05 to create invoices based on the Recurring Invoices report.
(5). When completed, reset the date of the accounting software back to the current date.
(6). Issue the resulting invoices to customers at once.
Printing and Issuing Invoice
This procedure is used by the accounts receivable clerk to print and issue invoices to customers as well as to file.
Step-1: Create Electronic Invoice. There are four essential task to be performed to complete this step:
(1). If no Adobe Acrobat software yet, install the latest version.
(2). Go to the Create Invoice screen in the accounting software. Enter all information for the new invoice. When complete, print a test invoice. Verify that the following information on the invoice is correct:
• Accounting department contact information
• Contact information for a credit card payment
• The payment due date
• The early payment discount date
(3). Print the invoice to the “Adobe PDF” printer that will appear in the list of available printers. Use the invoice number as the file name.
(4). Send the invoice to a customer by linking it to an e-mail message as a file attachment.
Step-2: Create Paper Invoice – There are eight tasks to do in this step:
(1). Go to the Create Invoice screen in the accounting software. Enter all information for the new invoice. When complete, print a test invoice.
(2). Go to the Billing Batch screen and select all unprinted invoices.
(3). Turn on the printer and verify that the continuous-feed invoice stock is correctly positioned in it.
(4). Print a sample invoice to ensure that the line settings are correct.
(5). Verify that the continuous-feed invoice stock has not been burst.
(6). Print the complete batch of invoices.
(7). Scan the invoices to ensure that they were correctly printed. Have a second person independently review all large-dollar invoices to ensure that the correct quantities, prices, extensions, and sales taxes were used.
(8). If there are no errors, check off the flag in the accounting software asking if the print run was successful.
Step-3: Prepare and Send Invoices – It needs four task to be done to complete this step:
(1). Burst all invoices, with the white copies going to the CUSTOMER bin, the goldenrod copies to the ALPHABETICAL FILE bin, and the pink copies to the NUMERICAL FILE bin.
(2). Stuff envelopes with the white invoice copies.
(3). Stamp “Address Correction Requested” on every envelope.
(4). Affix postage to the envelopes and put them in the interoffice mail, marked for outside delivery.
Step-4: File Invoice Copies. Do these two task to complete this step and close the procedure:
(1). Attach the pink invoice copies to the billing of lading and packing slip copies, and file by customer.
(2). File the goldenrod copies in numerical order.
Receiving and Depositing Cash
This procedure is used by the mailroom and cash clerk to receive cash from a variety of sources and deposit it into the company bank account.
Step-1: Receive Checks and Cash Through Mail
(1). Enter today’s date on a new copy of the Mailroom Remittance Sheet
(2). Enter on the Sheet for each check received the check number, customer name, the city and state from which the payment was sent, and the amount paid. If cash is received, enter this amount in the “Source if not check” column. Enter the grand total of all checks and cash received at the bottom of the Sheet. Sign and date the Sheet.
(3). Insert all checks and cash received, along with the completed Sheet and a remittance copy, in a locking interoffice mail pouch and have it couriered to the Cash Clerk.
(4). When the courier returns with an initialed copy of the Sheet, showing evidence of receipt by the Cash Clerk, file it by date in a locking cabinet in the mailroom.
Step-2: Total and Record Cash
(1). Open the interoffice mail pouch from the mailroom containing the daily checks and cash receipts. Initial the enclosed copy of the Mailroom Remittance Sheet and return it by courier to the mailroom.
(2). Summarize all cash and checks received on an adding machine tape.
(3). Enter all checks received on a deposit slip, as well as cash receipts in a lump sum. Verify that the deposit slip total and the adding machine tape total are the same. If not, recount the cash and checks.
Step-3: Prepare and Issue Deposit
(1). Give the deposit slip and attached checks and cash to the second cash clerk, who compares the check total to the Mailroom remittance Sheet forwarded from the mailroom. Reconcile any differences.
(2). Split all remittance advices from the checks, and copy all checks that have invoice numbers written on them. Verify that this packet of information matches the total that is to be sent to the bank in the deposit.
(3). Send the completed deposit to the bank by courier.
Step-4: Forward Information – Send the remittance advice packet to the accounts receivable staff, which will apply it to outstanding accounts receivable.
Processing Credit Card Receipts
This procedure is used by the cash clerk to process credit card payments through an Internet-based processing site.
Step-1: Collect Credit Card Information – Verify that the customer has supplied all information required for the credit card processing: name on the card, credit card number, expiration date, and billing address. Also retain the customer’s phone number in case the payment is not accepted, so corrected information can be obtained.
Step-2: Enter Credit Card Transaction:
(1). Access the Internet credit card processing site and log in.
(2). Enter all customer-supplied information on the Web screen, as well as the invoice number, amount to be billed, and a brief description of the billing.
(3). If the transaction is not accepted, call the customer and review all supplied information to determine its accuracy. As an alternative, obtain information for a different credit card from the customer.
(4). If the transaction is accepted, go to the accounting computer system and log in the cash receipt associated with the transaction. Date the transaction one day forward, since this more closely corresponds to the settlement date and corresponding receipt of cash.
Step-3: Complete Related Paperwork
(1). Stamp the invoice with a “Paid in Full” stamp, initial the stamp, and make a copy of it.
(2). Mail one copy of the stamped invoice to the person whose name was on the credit card (not the person listed on the invoice, if any), since this person will need it as a receipt.
(3). Enter the cash receipt in the computer system, labeling it as a credit card receipt, and file the remaining copy in the customer file by date.
Applying Cash to Accounts Receivable
This procedure is used by the accounts receivable clerk to apply cash received from customers to open accounts receivable balances.
Step-1: Summarize Cash Receipts – Add up all daily cash receipts and match the paper tape of the summarization to the individual payments to ensure that the total is correct.
Step-2: Enter Total Cash Amount – Go to the accounting software and enter the APPLY screen. At the top of the screen, enter today’s date and the total amount to be applied.
Step-3: Apply Individual Payment Amounts
(1). For each customer payment, enter the customer number, individual check amount, the check number and date, and then TAB to the detail section of the screen. If the check is from a customer not listed in the Customer Master File, then manually enter the customer name in the Customer Name field.
(2). The list of all open invoices for each customer will appear. Click on each invoice being paid and enter any discounts taken.
(3). If some portion of the check is for an invoice not currently unpaid, then credit the payment to the Other Liabilities account, and note any supporting information in the Details field.
(4). After identifying all invoices paid by each customer, click on the “Next Payment” button at the bottom of the screen. Continue in this fashion until all receipts have been entered.
Step-4: Notify Collections Staff of Incomplete Payments
(1). If a customer has made an incomplete payment, print the Cash Receipts Report for the day when the payment was recorded.
(2). Highlight all partial payments on the report, and make additional notations as necessary.
(3). Forward the report to the credit manager.
Step-5: Thank Customers for Timely Payment
(1). Print the Customer Ledger Report. Scan through the report and select ten customers at random who have paid for invoices in a timely manner.
(2). Access the Customer Master File and locate the contact information for each of the selected customer’s accounts payable managers.
(3). Call each accounts payable manager and thank him or her for the timely payment.
Step-6: File Receipt Documentation – Staple the cash receipts report to the daily cash receipts, and file the set of documents in the applied cash filing cabinet.
Reviewing Unapplied Cash
This procedure is used by the cash application staff to disposition all cash receipts that cannot be applied to open accounts receivable. This procedure also performed by the Accounts Receivable Clerk
Step-1: Print Unapplied Cash Report – Go to the accounting software and print the Unapplied Cash Report. If there is no such report, go to the General Ledger Report and select only the Unapplied Cash general ledger account, and print the detail.
Step-2: Investigate Discounted Payments:
(1). Examine the remittance advice accompanying each unapplied check payment and compare the indicated invoice number to the same invoice number in the Accounts Receivable Aging Report.
(2). Contact the customer’s accounts payable staff and determine why the payment was discounted from the original invoice amount. Document the answer.
(3). Discuss the reasons for discounts taken with the credit manager or controller. If the reason is acceptable, apply the payment to the invoice and process a credit for the remaining balance. Apply the credit against the remaining balance.
(4). If the reason for the discount taken relates to an operational issue within the company, document the problem and send it to the Chief Operating Officer for action. Also enter the following information about the discount in the corporate deduction tracking database:
• Customer name
• Date deduction taken
• Amount of deduction taken
• Invoice number on which deduction taken
• Reason given for deduction
• Customer contact information
(5). If the reason for the discount taken is not acceptable, send a letter to the customer, signed by the controller that explains the company’s position relative to the discount, and reminding the customer that it still owes the open balance.
(6). Copy the letter to the credit manager, and store another copy in the customer’s file.
Step-3: Return Overpayments
(1). If investigation reveals that the customer has overpaid or double paid an invoice, apply the payment to the Other Liabilities general ledger account.
(2). Create a manual check to the customer for the amount of the overpayment (thereby avoiding creating a new vendor account in the computer system).
(3). Apply the manual check to the Other Liabilities general ledger account to eliminate the liability.
(4). Make a photocopy of the customer’s check and remittance advice, and include it in a mailing to the customer with the repayment check, as well as a note describing the reason for the payment.
(5). File the company copy of the remittance advice and any supporting documentation in the accounts payable files.
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