a recurring set of business activities and related information processing operations associated with providing goods and services to customers and collecting cash in payment for those sales.
Revenue cycle primary objective
to provide the right product in the right place at the right time for the right price.
4 Basic Revenue cycle Activities
1. Sales order entry 2. Shipping 3. Billing 4. Cash collections
1st general threat to revenue cycle
inaccurate or invalid master file
2nd general threat to revenue cycle
unauthorized disclosure of senstitive information
3rd general threat to revenue cycle
loss or destruction of master data
a metric to evaluate overall performance of revenue cycle activities.
3 steps to sales order entry process
1. taking the customer's order 2. checking and approving customer credit 3. checking inventory availability.
sales order document
an electronic form displayed on a computer monitor screen.
Electronic data interchang (EDI)
the use of computerized communications and a standard coding scheme to submit business documents electronically in a format that can be automatically processed by the recipient's information system.
Basic threat for sales order entry
important data about the order is either missing or inaccurate.
2nd threat for sales order entry
the legtimacy of orders.
the maximum allowable account balance that management wises to allow for a customer based on the customer's past credit history and ability to pay.
Accounts receivable aging report
a roport listing customer account balances by length of time outstanding.
a document authorizing te purchase or production of items that is created when there is insufficient inventory to meet customer orders.
document that athorized removal of merchandise from inventory.
3rd threat for sales order entry
4th threat to sales order entry
stockouts or excess inventory
5th threat to sales order entry
loss of customers
Customer relationship management systems (CRM)
a system that contains customer-related data organized in a manner to facilitate custoer service, sales, and retention.
1st threat to shipping
picking the wrong items or the wrong quantity
2nd threat to shipping
theft of inventory
3rd threat to shipping
shipping errors (delay, or failue to ship)
2 steps to shipping
1. picking and packing the order 2. shipping the order
list the quantity and description of each item included in the shipment.
bill of lading
document used to establish responsibility for shipping goods via a third party.
1st threat of billing
failure to bill
2nd threat to billing
3rd threat to billing
posting errors in accounts receivables
4th threat to billing
inaccurate or invalid credit memos
a document that notifies customers of the amount to be paid and where to send payment.
2 ways to maintain accounts receivables
1. open-invoice method 2. balance-forward method
method of maintaining customer accounts that generates paments for each individual sales transaction.
a turnaround document returned by the customers with payment.
method of maintaining accounts receivable in which customers typically pay according to the amount shown on a monthly statement, rather than by individual invoices.
a document summerizing all transactions that occurred during the past month and informing customers of their current account balance.
producing monthly statements for subsets of customers at different times.
a document used to authorized reducing the balance in a customer account.
1st threat of cash collections
theft of cash
2nd threat of cash collections
cash flow problems
a document listing all checks received by mail.
post office box to which customers send payments
electronic funds transfer (EFT)
the transfer of funds between two or more organizations or individuals using computers and other automated technology.
financial electronic data interchange (FEDI)
a system theat integrates EFT and EDI information.
cash flow budget
a budget that shows projected cash inflows and outflows for a specified period so that an organization can anticipate the need for short-term borrowing.