UBC
Accounts Receivable
You work with the IT division of the UBC corporation. UBC is building a digital platform to rationalize and automate its operations. The new platform will manage most of the Company’s functions (sales, shipping, etc.). The CEO has set up a steering committee and instructed them to begin implementing the new system. You are assigned to model the A/R department. This is what A/R has sent you.
From: United Box Company Accounts Receivable
To: you
Our industry is adopting the pay-upon-receipt model, as opposed to pay-upon-invoice. In this model, payments are sent by
the customers upon receipt of the goods. Our A/R employees review the funds received electronically (i.e., deposited in our
database) from the customers via their banks.
Since sometimes we ship goods that represent partial fulfillment of an order, we may receive several payments for each order.
Shipping is not a process that the A/R system manages. However, we want to store the electronic signature of the customers when
they accept goods.
Sometimes we ship too much, or the wrong items. An AR employee compares the details of the shipment (what items, how many...),
with the details of the order from sales, and what was accepted and paid by the customer. The purpose of the review is to
ensure that the correct amount was received from our clients. If the numbers match, we are done.
However sometimes they do not, and thus we need to reconcile them. Reconciliation is a mostly a manual process. A reconciliation
specialist (an A/R employee) contacts the customer via phone and changes incorrect entries in the system. We call these
occurrences "reconciliations" and we record them so that they can be reviewed later if needed. A reconciliation includes a date,
the amount, the AR employee, the payment that is being modified, and a brief note explaining what happened.
The later a customer is with payments, the lower their creditworthiness. The creditworthiness is calculated based on order and
payments dates. The system sends the credit ratings to the sales department for them to store.
Thanks again for your help in doing all this.
- Peter Parker, AR Manager