Chapter 7: Credit and Collections Best Practices Collection Management 7–1 Clearly define account ownership 7–2 Educate the sales staff about revenue recognition 7–3 Utilize collection call stratification 7–4 Base deduction management on transaction volume 7–5 Conduct consumer confidence calls with sales staff 7–6 Grant percentage discounts for early payment 7–7 Conduct immediate review of unapplied cash 7–8 Outsource collections 7–9 Sell your bankruptcy creditor claim 7–10 Simplify pricing structure 7–11 Write off small balances with no approval 7–12 Create an accurate bad debt forecast Collection Systems 7–13 Compile access to customer assets database 7–14 Maintain access to customer orders database 7–15 Arrange for automatic bankruptcy notification 7–16 Set up automatic fax of overdue invoices 7–17 Issue dunning letters automatically 7–18 Use a collection call database 7–19 Access up-to-date collection agency information 7–20 Implement customer order exception tracking 7–21 Install payment deduction investigation system 7–22 Report on ongoing customer complaints 7–23 Link to comprehensive collections software package 7–24 Institute lockbox collections 7–25 Use real-time cash application techniques Credit Issues 7–26 Create a credit policy 7–27 Modify the credit policy based on product margins 7–28 Modify the credit policy based on changing economic conditions 7–29 Modify the credit policy based on potential product obsolescence 7–30 Preapprove customer credit 7–31 Create standardized credit level determination system 7–32 Require a new credit application if customers have not ordered in some time 458 Appendix A ch19_4773.qxd 12/29/06 9:38 AM Page 458 7–33 Review the credit levels of all customers who stop taking cash discounts 7–34 Call new customers and explain credit terms 7–35 Verify customer locations from reverse phone records and satellite photos 7–36 Issue a payment procedure to customers 7–37 Join an industry credit group 7–38 Refer a potential customer to a distributor 7–39 Require intercorporate guarantees 7–40 Obtain credit insurance 7–41 Shorten the terms of sale Invoice Issues 7–42 Add receipt signature to invoice 7–43 E-mail invoices in Acrobat format Chapter 8: Commissions Best Practices Commission Calculations 8–1 Automatically calculate commissions in the computer system 8–2 Calculate final commissions from actual data 8–3 Construct a standard commission terms table 8–4 Periodically issue a summary of commission rates 8–5 Simplify the commission structure Commission Payments 8–6 Include commission payments in payroll payments 8–7 Lengthen the interval between commission payments 8–8 Only pay commissions from cash received 8–9 Periodically audit commissions paid Commission Systems 8–10 Install incentive compensation management software 8–11 Post commission payments on the company intranet 8–12 Show potential commissions on cash register Chapter 9: Costing Best Practices 9–1 Audit bills of material 9–2 Audit labor routings 9–3 Eliminate high-leverage overhead allocation bases 9–4 Assign overhead personnel to specific sub-plants Appendix A 459 ch19_4773.qxd 12/29/06 9:38 AM Page 459 460 Appendix A 9–5 Use perfect standards for material variance reporting 9–6 Eliminate labor variance reporting 9–7 Follow a schedule of inventory obsolescence reviews 9–8 Eliminate the tracking of work-in-process inventory 9–9 Implement activity-based costing 9–10 Implement throughput accounting 9–11 Implement target costing 9–12 Track excess capacity 9–13 Limit access to unit of measure changes 9–14 Report on landed cost instead of supplier price 9–15 Review cost trends 9–16 Review material scrap levels 9–17 Revise traditional cost accounting reports Chapter 10: Filing Best Practices Mailroom Improvements 10–1 Open envelopes with a belt sander 10–2 Improve the mailroom interface Computer-Related Filing Issues 10–3 Add digital signatures to electronic documents 10–4 Archive canceled checks on CD-ROM 10–5 Archive computer files 10–6 Implement document imaging 10–7 Eliminate stored paper documents if already in computer 10–8 Extend time period before computer records are purged 10–9 Extend use of existing computer database 10–10 Improve computer system reliability 10–11 Track documents with RFID Other Filing Issues 10–12 Adopt a document-destruction policy 10–13 Eliminate attaching back-up materials to checks for signing 10–14 Eliminate reports 10–15 Move records off-site 10–16 Reduce number of form copies to file ch19_4773.qxd 12/29/06 9:38 AM Page 460 Appendix A 461 Chapter 11: Finance Best Practices Financing and Investment Activities 11–1 Strategize cost of capital reductions 11–2 Obtain financing through Internet lender sites 11–3 Issue direct access notes 11–4 Purchase debt directly from the government 11–5 Take a business unit public Investor Relations 11–6 Eliminate small investors 11–7 Open conference calls to the public 11–8 Issue investor relations podcasts 11–9 Outsource the company stock purchase plan 11–10 Sell shares in an Internet-based auction 11–11 Use Web broadcasting for public reporting Option Management 11–12 Automate option tracking 11–13 Use Internet-based options pricing services Pension Management 11–14 Automate 401(k) plan enrollment 11–15 Grant employees immediate 401(k) eligibility Risk Management 11–16 Consolidate insurance policies 11–17 Obtain key man life insurance for the CFO 11–18 Obtain advance rating assessments 11–19 Rent a captive insurance company 11–20 Use Internet-based risk measurement services 11–21 Issue catastrophe bonds Treasury Management 11–22 Centralize foreign exchange management 11–23 Settle foreign exchange transactions with the continuous link settlement system 11–24 Use natural hedging for transaction risks 11–25 Install a treasury workstation 11–26 Optimize the organization of treasury operations 11–27 Process foreign exchange transactions over the Internet ch19_4773.qxd 12/29/06 9:38 AM Page 461 462 Appendix A Chapter 12: Financial Statements Best Practices Financial Reports 12–1 Move operating data to other reports 12–2 Post financial statements in an Excel PivotTable on the Internet 12–3 Restrict the level of reporting 12–4 Write financial statement footnotes in advance 12–5 Create a disclosure committee Work Automation 12–6 Automate recurring journal entries 12–7 Automate the cutoff Work Elimination 12–8 Avoid the bank reconciliation 12–9 Defer routine work 12–10 Eliminate multiple approvals 12–11 Eliminate small accruals 12–12 Reduce investigation levels Work Management 12–13 Assign closing responsibilities 12–14 Compress billing activities 12–15 Conduct transaction training 12–16 Continually review wait times 12–17 Convert serial activities to parallel ones 12–18 Create a closing schedule 12–19 Document the process 12–20 Restrict the use of journal entries 12–21 Train the staff in closing procedures 12–22 Use cycle counting to avoid month-end counts 12–23 Use internal audits to locate transaction problems in advance 12–24 Use standard journal entry forms Work Timing 12–25 Complete allocation bases in advance 12–26 Conduct daily review of the financial statements ch19_4773.qxd 12/29/06 9:38 AM Page 462 Appendix A 463 Chapter 13: General Best Practices Management 13–1 Consolidate all accounting functions 13–2 Continually review key process cycles 13–3 Create a policies and procedures manual 13–4 Eliminate all transaction backlogs 13–5 Implement process-centering 13–6 Issue activity calendars to all accounting positions 13–7 Post the policies and procedures manual on the company intranet site 13–8 Sell the shared services center 13–9 Switch to an application service provider Reporting 13–10 Switch to on-line reporting 13–11 Track function measurements 13–12 Use Balanced Scorecard reporting Systems 13–13 Create a contract terms database 13–14 Install a knowledge management system 13–15 Scan fingerprints at user workstations Taxation 13–16 Create an on-line tax policy listing 13–17 Designate a tax liaison for each government jurisdiction 13–18 Assign tax staff to business units 13–19 Outsource tax form preparation 13–20 Pay federal taxes on-line 13–21 Pay taxes with a credit card 13–22 Reduce tax penalties with Internet-based penalty modeling 13–23 Subscribe to an on-line tax information service 13–24 Move intellectual property to an offshore holding company Training 13–25 Create accounting training teams 13–26 Create an ongoing training program for all accounting personnel 13–27 Create computer-based training movies 13–28 Implement cross-training for mission-critical activities ch19_4773.qxd 12/29/06 9:38 AM Page 463 Chapter 14: General Ledger Best Practices Chart of Accounts 14–1 Eliminate small-balance accounts 14–2 Modify account code structure for storage of ABC information 14–3 Reduce the chart of accounts 14–4 Use identical chart of accounts for subsidiaries Data Warehousing 14–5 Use data warehouse for report distribution 14–6 Use forms/rates data warehouse for automated tax filings 14–7 Use the general ledger as a data warehouse General 14–8 Restrict use of journal entries 14–9 Avoid general ledger posting bottlenecks 14–10 Have subsidiaries update their own data in the central general ledger 14–11 Prescreen construction-in-progess entries System Additions 14–12 Construct automated interfaces to software that summarizes into the general ledger 14–13 Create general ledger drill-down capability 14–14 Overlay the general ledger with a consolidation and reporting package 14–15 Use automated error-checking Chapter 15: Internal Auditing Best Practices Assisting Business Units 15–1 Annually update an internal control assessment of each business unit 15–2 Issue self-audit guides to business units 15–3 Recommend business process improvements to business units 15–4 Track audit results through business unit surveys 15–5 Train business unit staff on control issues 15–6 Train new business unit managers on control issues Internal Audit Management 15–7 Avoid overauditing of internal audits 15–8 Complete all internal audit work papers in the field 15–9 Create a control standards manual 464 Appendix A ch19_4773.qxd 12/29/06 9:38 AM Page 464 15–10 Create an on-line internal audit library 15–11 Create and disseminate information from a best practices database 15–12 Outsource the internal audit function 15–13 Schedule some internal audits on a just-in-time basis 15–14 Schedule internal audits based on risk 15–15 Use workflow software for internal audits Internal Audit Staffing 15–16 Fill internal audit positions from operations on a rotating basis 15–17 Add specialists to audit teams 15–18 Assign an auditor to be a relationship manager with each business unit 15–19 Assign internal auditors to system development teams 15–20 Create an auditor skills matrix 15–21 Use Excel for continuous auditing Chapter 16: Inventory Best Practices Bill of Material Accuracy 16–1 Audit bills of material 16–2 Conduct a configuration audit 16–3 Modify the bills of material based on actual scrap levels 16–4 Review inventory returned to the warehouse 16–5 Modify the bills of material for temporary substitutions 16–6 Use bills of material to find inventory made obsolete by product withdrawals Efficiency Issues 16–7 Compare open purchase orders to current requirements 16–8 Reject unplanned receipts 16–9 Obtain advance shipping notices for inbound deliveries 16–10 Eliminate the receiving function 16–11 Use standard containers to move, store, and count inventory 16–12 Use different storage systems based on cubic transactional volume 16–13 Optimize inventory storage through periodic location changes 16–14 Eliminate the warehouse Inventory Accuracy 16–15 Audit all inventory transactions 16–16 Compare recorded inventory activity to on-hand inventories 16–17 Eliminate the physical count process 16–18 Cycle count based on usage frequency Appendix A 465 ch19_4773.qxd 12/29/06 9:38 AM Page 465 16–19 Lock down the warehouse area 16–20 Move inventory to floor stock 16–21 Segregate customer-owned inventory 16–22 Streamline the physical count process 16–23 Track inventory accuracy 16–24 Train the warehouse and accounting staffs in inventory procedures 16–25 Verify that all receipts are entered in the computer at once Inventory Transactions 16–26 Record inventory transactions with bar codes 16–27 Record inventory transactions with radio frequency communications 16–28 Track inventory with radio frequency identification 16–29 Eliminate all paper from inventory transactions 16–30 Eliminate all transaction backlogs 16–31 Immediately review all negative inventory balances Inventory Reduction 16–32 Reduce the number of products 16–33 Reduce the number of product options 16–34 Obtain direct links into customer inventory planning systems 16–35 Adopt just-in-time purchasing 16–36 Shift raw materials ownership to suppliers 16–37 Drop ship inventory 16–38 Reduce safety stocks by accelerating the flow of internal information 16–39 Reduce safety stock by shrinking supplier lead times 16–40 Use variable safety stocks for fluctuating demand 16–41 Cross-dock inventory 16–42 Use overnight delivery from a single location for selected items 16–43 Focus inventory reduction efforts on high-usage items 16–44 Eliminate redundant part numbers 16–45 Standardize parts 16–46 Identify inactive inventory in the product master file Chapter 17: Payroll Best Practices Employee Deductions 17–1 Disallow prepayments 17–2 Create employee self-service for payroll changes 17–3 Minimize payroll deductions 466 Appendix A ch19_4773.qxd 12/29/06 9:38 AM Page 466 17–4 Prohibit deductions for employee purchases Employee Forms 17–5 Post forms on an intranet site Employee Time Tracking 17–6 Avoid job costing through the payroll system 17–7 Switch to salaried positions 17–8 Use computerized time clocks 17–9 Use biometric time clocks 17–10 Track time with mobile phones 17–11 Use honor system to track vacation and sick time Payments to Employees 17–12 Issue electronic W-2 forms to employees 17–13 Outsource W-2 form creation and delivery 17–14 Post payroll remittances on company intranet 17–15 Only allow on-line payroll remittance viewing if employees use direct deposit 17–16 Transfer payroll to debit cards 17–17 Use direct deposit Payroll Management 17–18 Automate vacation accruals 17–19 Consolidate payroll systems 17–20 Eliminate personal leave days 17–21 Link payroll changes to employee events 17–22 Install manager self-service 17–23 Link the 401(k) plan to the payroll system 17–24 Link the payroll and human resources databases 17–25 Minimize payroll cycles 17–26 Outsource employment verifications 17–27 Outsource the payroll function 17–28 Use Web-based payroll outsourcing 17–29 Publish answers to frequently asked questions on an intranet site Chapter 18: Policies in Support of Best Practices 18–1 Accounts Payable Policies for Best Practices (Chapter 3) • Procurement cards shall be the preferred payment tool for purchases under $_____. Appendix A 467 ch19_4773.qxd 12/29/06 9:38 AM Page 467 [...]... sites are listed in alphabetical order www.bestcalls.com Related best practice: Chapter 11, Open conference calls to the public www.capital.com Related best practice: Chapter 11, Obtain financing through Internet lender sites www.checkfree.com Related best practice: Chapter 4, Issue electronic invoices through the Internet www.conferencecallcompany.com Related best practice: Chapter 11, Open conference... best practice: Chapter 11, Open conference calls to the public www.ivolatility.com Related best practice: Chapter 11, Use Internet-based options pricing services www.netstockdirect.com Related best practice: Chapter 11, Outsource the company stock purchase plan www.paytrust.com Related best practice: Chapter 3, Shift incoming billings to an EDI data-entry supplier www.publicdebt.treas.gov Related best. .. Of payables documents, 37 Filing Best practices, 221–243, 460 Impact of best practices on, 241–243 ch21_ind_4773.qxd 12/29/06 9:40 AM Page 486 486 Filing (cont.) Implementation issues, 221–222 Policies, 449 Finance Best practices, 246–265, 461 Implementation issues, 244–246 Policies, 450 Financial statement Best practices, 268–294, 462 Daily review, 291–292 Impact of best practices on, 292–294 Implementation... directly from the government www.riskgrades.com Related best practice: Chapter 11, Use Internet-based risk measurement services www.speedpay.com Related best practice: Chapter 4, Issue electronic invoices through the Internet www.statusfactory.com Related best practice: Chapter 3, Shift incoming billings to an EDI data-entry supplier www.vcall.com Related best practice: Chapter 11, Open conference calls to... Training, 357–358 Cost-benefit analysis, 9 Cost of capital reduction, 246–247 Costing Best practices, 200–220, 459–460 Impact of best practices on, 218–220 Implementation issues, 200–201 Policies, 449 Reports, 217–218 Trend analysis, 214–215 Credit and collection Best practices, 148–186, 458–459 Group, 178–179 Impact of best practices on, 183–186 Implementation issues, 145–148 Policies, 171–174, 448 Pre-approval,... 100 North Tryon St Charlotte, NC 28255 800-432-1000 www.bankofamerica.com Related best practice: Chapter 11, Centralize foreign exchange management ch20_4773.qxd 12/29/06 9:39 AM Page 473 Appendix B 473 Best Software 8800 N Gainey Center Drive, Ste 200 Scottsdale, Arizona 85258 888-855-5222 www.bestsoftware.com Related best practice: Chapter 7, Use a collection call database Callidus Software 160 West... www.fexco.com Related best practice: Chapter 3, Outsource VAT reclamations ch20_4773.qxd 12/29/06 9:39 AM Page 475 Appendix B 475 GAIN Capital Group 550 Hills Drive Bedminster, NJ 07921 908-731-0700 www.gaincapital.com Related best practice: Chapter 11, Process foreign exchange transactions over the Internet Geac, Inc 11 Allstate Parkway, Ste 300 Markham ON L3R 9T8 905-475-0525 www.geac.com Related best practices:... Related best practice: Chapter 13, Create computer-based training movies IBM New Orchard Road Armonk, NY 10504 914-499-7777 www.ibm.com Related best practices: Chapter 3, Automate expense reporting Chapter 13, Switch to an application service provider ch20_4773.qxd 12/29/06 9:39 AM Page 476 476 Appendix B Imaginatik 332 Newbury Street Boston, MA 02115 866-917-2975 www.imaginatik.com Related best practice:... www.recognitionsystems.ingersollrand.com Related best practice: Chapter 17, Use biometric time clocks Ketera Technologies 3965 Freedom Circle Santa Clara, CA 95054 408-572-9500 www.ketera.com Related best practice: Chapter 3, Install a low-cost spend management system LaSalle Broker Dealer Services 327 Plaza Real Boca Raton, FL 33432 800-327-1546 www.directnotes.com Related best practice: Chapter 11, Issue direct... www.meridianvat.com Related best practice: Chapter 3, Outsource VAT reclamations Microsoft Corporation One Microsoft Way Redmond, WA 98052 425-882-8080 www.microsoft.com Related best practice: Chapter 12, Post financial statements in an Excel PivotTable on the Internet National Association of Credit Management 8840 Columbia 100 Parkway Columbia, Maryland 21045 410-740-5560 www.nacm.org Related best practice: Chapter . 463 Chapter 13: General Best Practices Management 13 1 Consolidate all accounting functions 13 2 Continually review key process cycles 13 3 Create a policies and procedures manual 13 4 Eliminate. services center 13 9 Switch to an application service provider Reporting 13 10 Switch to on-line reporting 13 11 Track function measurements 13 12 Use Balanced Scorecard reporting Systems 13 13 Create. transaction backlogs 13 5 Implement process-centering 13 6 Issue activity calendars to all accounting positions 13 7 Post the policies and procedures manual on the company intranet site 13 8 Sell the