Requirements - Accounts Receivables / Cash Receipts (AR)

Overview

The Accounts Receivable/Cash Receipts application provides the closing step in the company's operating cycle by tracking and collecting customer payments for goods delivered or services rendered. Additionally, the accounts receivable system should provide information to management concerning sales commissions, customer credit standing and sales analysis, as well as being a basic component of the company's financial accounting system.

To achieve these objectives, the application should maintain customer information, customer account balances on either an openitem or balanceforward basis, and permit entry of handwritten invoices and customer account adjustments. Users should also be able to enter both payments on account and miscellaneous cash receipts. The system should also permit entry of partial and advance payments from customers.

Customer invoices should be automatically transferred from the order entry/invoicing application to the accounts receivable/cash receipts application. Subsequent cash receipts processing should automatically post to the appropriate general ledger accounts.

General Functions

• Access all customer and billing data online
• Maintain parent/subsidiary customer relations and support accumulation of several subsidiaries' balances to perform centralized billing
• Allow "also known as" customer relationships
• Maintain notes on the customer master file (e.g., to document phone conversations, collections comments, etc.)
• Maintain paid items in the open item file until monthend
• Purge all paid invoices on file for a userdefined period
• userspecified period of time
• Activate/deactivate customers on request
• Maintain state sales tax information to facilitate automatic calculation of sales tax on each invoice based on customer Ship toauthority
• Adjust inventory quantity and cost of sales through accounts receivable manual invoice entries
• Display the open item/balance forward status and aging for a customer

General

• Enter invoices, credit/debit memo and payments individually or in batches
• Automatically generate invoice information from orders existing on the system
• Generate statements at period end
• Override (e.g., Ship toaddresses, item descriptions, pricing, discounts/terms, service hours to be billed, billing rates, etc.)
• Automatically assign unique invoice numbers
• Maintain customer balances on an open item basis and balance forward basis
• Allow user defined aging categories (e.g., current, 30, 60, 90 days)
• Carry specific invoices as "deferred" and do not age until "due date" is in current period or allow userdefined aging categories
• Process installment billings and perform aging according to installment terms
• Process lease billings and perform aging according to lease terms
• Enter invoices in batches accepting only invoices from the same company and location in a batch
• Maintain a customer's account on a combined or separate basis for all customer locations
• Enter a reference number and reason code on any AR adjustments
• Display the following online for a customer with proper security access control:
• Account name and address, AP department phone number, contact name
• All open items and paid items for current and previous month
• Credit limit and history information
• Aged AR balances

Sales Commissions

• Allow the calculation of commission based upon:
• Gross Sale
• Net Sale
• Gross Profit
• Allow split commissions (indicate the number of splits allowed)
• Allow salesman to earn commission by line item invoiced (i.e. salesman receive commission for item sold not based upon split of total order)
• Allow a tiered commission structure
• Limit upper commission amount (2% up to $3,000)
• Make compound commission calculations based upon local currency amounts
• Exempt sales from commissions by:
• Item sold
• Customer sold to
• Base commission due calculation upon invoicing of order
• Base commission due calculation upon collection of invoice

Credit Management

• Allow userspecified levels of credit status and limits (Full, Cash only, Hold, Stop)
• Track full exposure by customer (customer credit limit minus outstanding receivables and orders)
• Override customer credit limit with authorization
• Inquire customer orders, receivables and credit status online
• Generate a userspecified number of delinquency notices (Dunning letters) based on age and amount of debt, wording of letter
• Suppress Dunning letters by customer
• Enter credit memos to update accounts receivable and, optionally, sales analysis

Credit/Debit Memos and Adjustments

• Enter debit and credit memo's either individually online or in batches
• Allow the entry of negative credit memos (to act as internal adjustments)
• Automatically assign unique credit memo number
• Generate credit memos without affecting the invoice balance (e.g., issue the credit against the account as a whole)
• Enter credit memos during cash posting
• Print debit and credit memos on request
• Enter credit memos in batches accepting only invoices from the same company and location in a batch

Letters of Credit

• Allow letters of credit
• Track payments issued against letters of credit
• Identify contingent liability in existence at any time based on open letters of credit
• Match letters of credit against corresponding purchase orders and invoices

Billing

• Allow partial billing of an invoice amount
• Separate open receivables by division/department for collections purposes
• Automatically calculate finance/delinquency charges based on "as of" date and automatically apply these charges to customer balances
• Support extended payment terms and automatically adjust aging and delinquency charges
• Automatically compute early payment discounts based on userdefined customer terms
• Support discount terms based on volume purchases
• Remove payment discount based on "as of" date
• Automatically write off the difference between invoiced amount and cash posting within a predetermined tolerance
• Maintain daily AR billing control total with supporting detail
• Automatically invoice based on the pick ticket items which have been pulled from inventory
• Suppress statements with zero and credit balance
• Generate tearoff remittance advice to be returned with the payment
• Compute and add delinquency charge rates on the overdue balances for the following:
• Selected accounts
• All accounts
• Handle accounts with extended payment terms during the aging process and for assessing delinquency charges
• Automatically delete all customers with no activity in a specified period of time. These customers should first be printed on a "notification" report before being deleted
• Suppress printing statements for any customer with a zero or credit balance or who falls below the minimum statement balance
• Generate reconciliationstyle customer statements showing beginning open items, charges during the month, credits during the month and ending open items with an aging recap

Cash Application

• Post cash receipts online
• Initiate cash posting by entering a customer number, customer name, partial customer partial name or invoice number
• Display all open customer invoices during payment posting
• Automatically apply cash receipts open line items open invoices or active accounts
• Automatically apply cash receipts to oldest invoices first
• Apply a single Cheque to multiple open items
• Allow partial payments to be applied to specific invoice line items, or to the invoice as a whole
• Allocate excess payments to unapplied cash for resolution
• Write off a receivable amount at the time of cash application
• Process cash in advance payments for deposits and prepayments (for high credit risk customers)
• Use a cash in advance (e.g., deposit) payment to credit an open invoice
• Allow multiple cash in advance payments per customer
• Receipt cash for items other than invoices such as miscellaneous cash
• Provide warning if unearned discounts are taken
• Allocate payments and credits from parent company accounts to subsidiary accounts
• Process miscellaneous cash receipts through the cash receipts application
• Store partial payments and overpayments as a separate open item against the original invoice amount until the invoice is fully cleared
• Accommodate a different closing period for sales and accounting
• Compute early payment discount terms (--, / % , Net ) and "flag" accounts that take unearned discounts
• Process insufficient funds Cheques with correct posting to the general ledger

Enquires

• Review on line all static customer data by:
• Customer Identifier
• Customer Name
• Customer Zip
• Review on line all customer accounts above their assigned credit limits
• Review on-line all customer accounts with no activity since entered date
• Review on-line all customer accounts past due
• Review on line activity for specified account
• Review on-line customer aging and other statistics such as:
• highest balance
• average days to pay
• last payment date
• average payment
• Review all static document data for customer account by:
• Customer Identifier
• Document Identifier
• Date of Document
• Review on-line all static data relating to a payment by:
• Cheque number
• Customer Identifier
• Date of Document

Reports

• Billing Statements – Customer statements, including beginning open items, new charges, credits and payments, ending open balance and aging recap
• Detailed Aged Trial Balance – A complete aged trial balance for each active customer showing each open invoice and any AR activity (e.g., payments, debit memos, credit memos, writeoffs, comments) and summary total aged balances across all customers
• Summary Aged Trial Balance – Summary of detailed aged trial balance by customer
• Delinquency Notices (Dunning Letters) – A variety of form letters sent to customers with open balances beyond a userspecified period of time
• Customer Master List – Lists all active customers including customer contact person information, including name, address and telephone number
• AR Invoice Register – Lists automated and manually entered invoices and control totals
• Credit/Debit Memos Register – Lists all memos generated
• Billing and Payment History – All invoices, adjustments and payments by customer for a userspecified period of time
• Cash Receipts Journal – Payments received each day by customer, including Cheque number, payment type, invoice number, invoice date, amount of cash received and special GL account entries such as writeoffs
• Payment Exceptions – Lists of all payments made not equal to the invoice amount by customer
• Sales Journal – Lists invoices sent by customer, amount due and related general ledger account
• Cash Receipts and Adjustments Journal – Lists cash payments received and adjustments made by customer and related general ledger accounts
• General Ledger Distribution report – Summarizes the distribution of AR general ledger transactions by account and date
• •Statistical Reporting – Maintains the following statistics and provides report capabilities for the following:
• Overall
• Average age of receivables
• Average number of collection days
• By customer
• Average age of receivable
• Average number of collection days
• Average sales amount for previous 12 months
• Date of last invoice
• Date of last payment
• Number of invoices for past 12 months
• Average invoice amount for past 12 months
• Number of times cash discount allowed for previous 12month period
• Highest balance due
• Number of times past due
• Sales Tax –Taxable and nontaxable invoice items and sales tax breakdown by state
• Mailing Labels – Customer mailings and labels (e.g., by territory, items usually purchased, etc.)

Forms

• Invoices
• Credit Memos
• Debit Memos
• Statements

Interfaces

• General Ledger/Financial Reporting – Cash receipts, sales invoices, and credit memos should be posted automatically
• •Inventory/Costing – Cost data developed in the application will be supplied to the accounts receivable system to permit proper computation of extensions
• Order Entry/Invoicing – Invoices and credit memos will post to customer AR accounts
• Sales Analysis – Sales and credit memo information will be automatically provided to the sales analysis application

Key Fields

• Customer Data
• Bill to customer number
• Bill to customer name
• Customer Doing Business As (DBA) name
• Bill to address (including foreign addresses)
• Ship tocustomer reference numbers
• Ship tocustomer names
• Multiple Ship toaddresses (including foreign addresses)
• Customer default shipping instructions, including default warehouse location for each customer Ship toaddress
• Freight code (e.g., for UPS)
• Telephone
• Contact name(s)
• D&B rating
• Credit limit
• Credit hold status indicator
• Tax/tax exempt indicators
• Tax exempt number
• Customer type
• Customer group
• Sales territory
• Sales representative(s)/salesperson(s) assigned
• Commissions percentage split (if based on customer)
• Discount code/terms information
• Credit and payment record
• Customer to receive statement (yes or no)
• Finance charge flag
• Date account opened
• Customer status (active/inactive)
• Year to date sales amount
• Last year sales amount
• Customer last date of activity
• Indicator identifying if customer will accept substitute items
• Indicator identifying if customer will accept partial shipments
• Indicator identifying if customer will accept backorders
• Customer billing and payment history
• Date and amount of last billing
• Date and amount of last payment
• Average time to pay
• Year to date billing and payment local currency
• Invoice information
• Order date
• Order number
• Salesperson identification
• Customer number
• Customer account
• Bill-to address
• Ship-to address
• Order type
• Item numbers
• Item quantities
• Freight amount
• Tax amount
• Service description
• Service hours
• Miscellaneous charges
• Shipping instructions
• Credit memo information
• Customer number
• Invoice number
• Invoice date
• Invoice line item(s)
• Amount of credit
• Reason for credit (e.g., item returned, error adjustment, etc.)
• Return authorization number
• Sales persons/representatives (for commission reduction)
• GL account distributions
• Cash Receipts
• Cheque Number
• Cheque Amount
• Apply-to document numbers
• Apply-To Document Amount
• Date of Payment
• Date of Entry
• Account Numbers

Audit Trails

• Produce an audit trail of all entries or changes to:
• Invoices
• Credit Memos
• Debit Memos
• Cheque/Payments
• Print portions of the audit trail for
• Specified Customer Account
• Specified General Ledger Account
• Specified Period of Time
• Track all maintenance activity to master customer files