Implementing an Enterprise Resource Planning (ERP) system is a significant investment for any business. To maximize returns and ensure the success of an ERP implementation, engaging effective ERP functional consultancy is paramount. Let’s delve into both tangible and intangible returns on investment, businesses can expect from this strategic partnership:
startegix
November 13, 2024
Process of managing accounts receivables
Introduction:
The design of any process is dependent on the framework which is used in designing it. It is the structure which helps us design a process. The accounts receivable process (AR) is no different from any other process and it is a part of the order-to-cash process (o2c). The framework which is used in designing this process is the COSO framework. It is a framework which divides the process into 5 levels.
AR process is a group of processes. AR process contains many other processes and each of such processes has subprocesses. This process document will discuss the sub-process level of business.
Account receivable meaning, in a business context, refers to the outstanding invoices or money owed to a company by its customers for goods or services delivered but not yet paid for. It is essentially a line of credit extended by the company to its customers, allowing them to pay for their purchases at a later date. Accounts receivable is recorded as an asset on the company’s balance sheet, representing the company’s expectation of incoming cash flow. Efficient management of accounts receivable is crucial for maintaining healthy cash flow and ensuring the financial stability of a business.
In this part, we are only going to discuss 1 of 38 other processes
Invoicing to Customers – Process Code [AR0001]
Objective:
This process aims to manage and direct the Accounts Receivable (AR) team in handling the invoices generated by the organization for its sales. This process is essential due to the numerous statutory, legal, and operational risks associated with it.
After reviewing this example, we can grasp the significance of the invoicing process.
Quote: “To maintain goodwill, customers must be invoiced accurately and promptly!”
Process Risks:
Process Owners:
Individuals with a minimum of three years of experience in the AR process, specifically in managing a team of at least five members.
Examples:
Process Roles:
Process Flow:
Definition and Risks:
Conclusion: In conclusion, the effective management of the Accounts Receivable (AR) process is a critical component for sustaining a company’s financial health and fostering strong customer relationships. By adhering to a well-structured framework, such as the COSO framework, businesses can systematically address the complexities and risks associated with invoicing and credit management. Implementing robust controls, accurate record-keeping, and clear communication protocols ensures compliance, reduces errors, and enhances customer satisfaction. Moreover, by regularly assessing and refining these processes, organizations can not only improve cash flow and reduce the likelihood of financial discrepancies but also build a trustworthy reputation in the marketplace. As businesses continue to evolve, maintaining agility and adaptability in AR processes will be essential in navigating future challenges and opportunities.
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