Rift Valley University

Training, Teaching and Learning Materials Development

RIFT VALLEY UNIVERSITY

GOTERA CAMPUS

The Ethiopian TVET-System

Accounts & Budget Support

Level-III

LEARNING GUIDE # 1

Unit of Competence: Process Applications for Credit

Module Title: Process Applications for Credit

LG Code: BUF ACB3 08 0812

TTLM Code: BUF ACB3M 08 0812

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Training, Teaching and Learning Materials Development

INTRODUCTION

Welcome to the module “Process Applications for Credit”. This learner’s

guide was prepared to help you achieve the required competence in “ Accounts
and Budget Support Level III”. This will be the source of information for you to
acquire knowledge attitude and skills in this particular occupation with minimum
supervision or help from your trainer.

Summary of Learning Outcomes

After completing this learning guide, you should be able to:

Lo1:- Check and verify application details

Lo2:- Submit assessment and decision

Lo3:- Maintain application records and complete necessary documentation

How to Use this TTLM

o Read through the Learning Guide carefully. It is divided into sections

that cover all the knowledge, skills and attitude that you need.
o Read Information Sheets and complete the Self-Check at the end of
each section to check your progress
o Read and make sure to Practice the activities in the Operation
Sheets. Ask your trainer to show you the correct way to do things or
talk to more experienced person for guidance.
o When you are ready, ask your trainer for institutional assessment
and provide you with feedback from your performance.

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Lo1:- Check and verify application details

Information may be related to:kinds of transactions, the most common being the sale of merchandise
or services on a credit sale.

Revenue, expenditure, production, and finance activities are common to business organizations. This

unit will provide an overview of transaction processing applications in each of these major cycles of

business activity. It discusses common revenue- and expenditure-cycle application systems. These

systems include sales order processing accounts receivable, purchasing, and payroll. The application

systems discussed in this chapter illustrate and emphasize the concept of organizational independence

(separation of functions) in the design of application systems. Organizational independence requires

that the custody of an asset be under a separate authority from record-keeping functions related to that

asset and both custody and record-keeping functions be under separate authority from any operating

functions that utilize the asset. The applications presented are not intended to serve as blueprints to be

duplicated regardless of to the specific situation at hand. They are however, a checklist. They provide a

frame of reference against which an analyst may contrast a proposed or existing system.

The data flow diagrams and document flowcharts presentations focus on the logical necessities of an

application system rather than on physical features. The information represented by the document

symbol in diagrams may be a paper form, a telephone call, a computer or satellite data Transmission, or

any other physical form. Technological considerations (equipment and devices) are not specifically

addressed because, although technology may alter the operating configuration of an application system,

the same ends should be accomplished regardless of technology. In this chapter you will be introduced

with sales order processing, Types of sales order system, accounts receivable system, Transaction flows

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in Accounts receivable system, Sales returns and allowances, Write offs accounts receivable and other

revenue cycle application systems.

Lo2:- Submit assessment and decision

Sales Order Processing

A sales order application system comprises the procedures involved in accepting and shipping

customer orders and in preparing invoices that describe products; services and assessments. The

sales order is the interface between the various functions necessary to process a customer order.

These functions are sales order, credit, finished goods, shipping, billing, accounts receivable, and

general ledger.

Sales Order -- The sales order function initiates the processing of customer orders with the

preparation of a sales order. The sale order contains descriptions of Products ordered, their prices

and descriptive data concerning the customer such as name shipping address, and, if necessary,

billing address. At this point, the actual quantities shipped and freight charges (if any) are not

known. The invoice will be prepared after the goods have been shipped and notice of this event is

forwarded to billing. Because the invoice is prepared after shipment, separate order and billing is

also called post-billing.

Credit- A customer’s credit standing should be verified prior to the shipment of goods. For regular

customers, the credit check involves determining that the total amount of credit granted does not

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exceed management’s general or specific authorization. For new customers a credit check is

necessary to establish the terms of sale to the customer. The sales order function should be

subjected to the control of an independent credit function to maintain the separation of duties.

Once credit has been approved, the sales order function distributes the sales order set. One copy of

each sales order is forwarded to billing. These are filed as open orders, allowing the billing function

to anticipate the receipt of matching shipping advices from the shipping function. One copy –

usually called the packing slip copy- is forwarded to shipping. This copy authorizes shipping to

receive goods from finished goods for shipping. Another copy – usually called the packing slip copy

– is forwarded to shipping. This copy authorizes shipping to receive goods from finished goods for

shipping. Another copy – usually called the stock copy – is forwarded to finished goods. This copy

authorizes finished goods to release goods from its custody for shipment to customers.

In some cases, a customer’s order may require that a production order be issued to produce the goods,

because the goods are not in stock. Such situations arise when the order is for a special nonstick item.

They also may arise as standard company practice due to either the customized nature of the product or

a short production cycle that alleviates the need for an inventory of finished goods. Such situations also

occur when items are out of-stock and must be back ordered. If the time between receiving an order

and actual shipment of the order is significant, an acknowledgment copy of the sales order may be sent

to the customer to inform the customer that the order has been received and is being processed.

Finished Goods- Finished goods pick the order as described on the stock copy of the sales order

(copy 3). Stock records are updated to reflect the actual quantities to be forwarded to shipping.

Actual quantities are noted on the stock copy of the sales order, which is then forwarded along with

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the goods to shipping. Shipping should sign the stock copy to acknowledge receipt of the quantities

noted there on form of finished goods.

Shipping- Shipping accepts the order for shipment after matching the packing slip copy to the

stock copy of the sales order. Shipping documentation is prepared according to the situation.

Frequently, this requires the preparation of a bill of lading. A bill of lading is the documentation

exchanged between a shipper and a carrier such as a trucking company. The bill of lading

documents freight charges and the transfer of goods from the shipping company to the

transportation company. Frequently, freight charges are paid by the shipper but billed to the

customer on the sales invoice. The packing slip copy of the sales order is usually included with the

customer’s order when it is shipped.

Billing - Shipping forwards documentation of the shipment to the billing function. This documentation is

termed the shipping advice and is usually the stock copy of the sales order and a copy of the bill of

lading. Billing pulls the related open order documentation, verifies the order, then prepares the invoice

by extending the charges for actual quantities shipped, freight charges (if any), and taxes (if any).

Invoices are mailed to customers. Invoices are recorded in the sales journal and posting copies are sent

to accounts receivable. Periodically, a journal voucher is prepared and forwarded to the general ledger

function for posting to the general ledger.

Accounts receivable and General Ledger- The distinction between billing and accounts receivable is

important to maintain separation of functions. Billing is responsible for invoicing individual sales

transactions, and accounts receivable maintains customer-accounts information and sends periodic

statements of accountant to customers. Billing does not have access to the financial records (the

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Learning Guide Dec. 4,2017

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receivables ledger), and the financial records are independent of the invoicing operation. The control

total of postings to the accounts receivable ledger that is sent to the general ledger by accounts

receivable is compared to the journal voucher sent from billing to validate shipping, and, finished goods

is importance to the establishment of accountability for the release of finished goods from inventory.

Authorised personnel may include: dispute resolution officer

 employees
supervisors and managers

Transactions may be processed: using manual or electronic systems

 using the standard procedures and systems of the financial services institution and
may include:
 bank cheques
 credit card transactions
 debits such as from:
 savings accounts
 cheque accounts
 inward credits/outward payments
 payroll deductions
Periodic payments.

Self Check

1. Transactions may be processed: using?

2. Authorised personnel may include?

3. Shipping documentation is prepared?

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Training, Teaching and Learning Materials Development

Lo3:- Maintain application records and complete necessary

documentation
Customer transactions are processed in an accurate and timely manner using
standard policies, procedures and systems
Documentation or systems entry to support transactions is checked for accuracy
and completeness and customer account and transaction details maintained and
verified using correct procedures
Customer complaints and disputes are resolved or referred to other authorized
personnel and customer accounts are rectified where necessary
 The relevant financial services organisation's policies, procedures and systems
may relate or be influenced by: administrative and clerical systems
 database and IT systems
 product and account and service range
 range of responsibility
 size, type and location of branch
types of equipment used.

Accurate reconciliation of subsidiary ledgers to general ledger accounts is performed

and fees appropriate to the transaction are levied in accordance with standard

procedures

Types of Sales Order Systems

Information Sheet – 1

Various relationships between the order, billing, and shipping functions are feasible depending on the

circumstances. The major consideration is the preparation of the invoice. In a complete pre-billing

system, the complete invoice is prepared at the same time as the shipping order. In this case, the

shipping order is usually a copy of the invoice. This system minimizes paperwork. The invoice is released

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Learning Guide Dec. 4,2017

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after the goods are shipped. A complete pre-billing system requires that all invoicing information be

known prior to the preparation of the invoice/shipping order set. This requires few back-orders or other

inventory problems. Also, freight and other charges must be either absorbed by the seller or

standardized (e.g., “add 50 cents fir postage”). Any change between the customer order as rewritten

and as actually shipped requires a new invoice and the destruction of the original invoice. If such

situations are common, complete pre-billing is very inefficient.

The shipping order is prepared separately from the invoice. The invoice is prepared after the goods

have been prepared for shipment. A separate order and billing system is necessary when there is a

significant difference between the information on the shipping order (internal to the seller) and the

invoice. For example, technical specifications in the shipping order may not be required or desired on

the invoice. Excessive back-order and out-of-stock conditions also warrant this approach, because the

final content of the invoice cannot be determined until the goods are ready for shipment. In many

industries, alterations of substitution of goods ordered are allowed by customary trade practices. In

retailing, for example, different styles or colors may be substituted in an order for clothing. The changed

specifications from the customer’s order must be shown on the invoice. In other instances, several

shipments are made to the same customer over a specific time period under a single blanket order. In

this case, there is no one-to-one correspondence between the customer order and the subsequent

invoices. Typically, one blanket order requires several separate invoices-- one for each shipment made

under the blanket order.

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Invoice Sample-

CITRUS SUPPLY CO. INVOICE

SOLD 1467 CLAY STREET

TO: PETERSBURG, WISCONSIN Burroughs B

44444

DITRUS SUPPLY CO.

SHIP 1467 CLAY STREET

TO: PETERSBURG, WISCONSIN

44444

TERMS ORDER NO. CUSTOMER NO. SOLD SHIP VIA DATE INVOI
BY CE NO.

2-10NET 30 P87654 102,912 7 OUR NOV. 15 12,347

TRUCK

CODE QUANTITY DESCRIPTION PRICE UNIT GROSS DISCOUN NET

T
13414522 10 CUTTING TIP TT-2.80 EA 28.00 28.00
3 .00
12415710 10 1.90 EA 19.00 18.62
SCREWDRIVR .38
15611410 5 1.50 PR 7.50 7.35
6”
.15
12488806 10 1.00 EA 10.00 10.00

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WELDING .00 63.97

GLOVE # 10
TAX 5.0% 3.20
DSK
HANDI 25.00
NG 92.17

Incomplete rebilling is a third type of sales order system. The incomplete pre-billing system is very

similar to a separate order and billing system. The only difference is that an invoice is originally prepared

by the sales order department rather than a sales order. The invoice is completed to the extent possible,

but because actual quantities shipped and freight charges (if any) cannot be known with certainty until

shipment, the invoice is incomplete (i.e., only partially finished). This invoice is then distributed in the

same fashion as the sales order in a separate order and billing system--with copies to finished goods,

shipping, and billing--except that multiple copies of the invoice are sent to billing. When billing receives

notification of shipment, it pulls its copies of the invoice and completes them. In separate order and

billing prepares the original copy of the invoice when it receives notification to shipment.

Both separate order and billing and incomplete billing are post-billing systems. Incomplete billing is

commonly used in manual systems, as only one document (an invoice) rather than two documents (a

sales order and an invoice) must be prepared. This reduces transcription of information and thus is often

more efficient in a manual system. Note that the sales order is primarily an internal document. The

invoice, on the other hand, is the customer’s formal notification of the amount due for the shipment.

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Note also that the terms invoice and bill can be used interchangeably. A bill of lading is an invoice for

freight charges. Separate order and billing might also be called separate order and invoicing.

Accounts Receivable System-

Accounts receivable represents the money owed by customers for merchandise sold or services

rendered. Because most business is done on credit, accounts receivable often represents the majority of

an organization’s working capital. Accounts receivable also maintains customer credit and payment

history information, which is useful in the overall administration of company credit policies.

Conceptually, the accounts receivable procedure is straightforward. A subsidiary ledger of individual

accounts is maintained, with a control account in the general ledger. Remittance advices are routed

from the cash receipts function; credit memos and other invoice adjustments are routed to the accounts

receivable department from the billing department. Debits and credits are posted to the individual

accounts; periodically, statements are prepared and sent to customers. Aging schedules are prepared as

a by-product of sending statements. Special credit reports may also be prepared.

There are also two basic approaches to an accounts receivable application: open- item and balance-

forward processing. In open-item processing, a separate record is maintained in the accounts

receivable system for each of the customer’s unpaid invoices. As customer remittances are received,

they are matched to the unpaid invoices. In balance-forward processing, a customer’s remittances are

applied against a customer’s total outstanding balance rather than against a customer’s individual

invoices. Data processing of accounts receivable can be tedious because of the volume of transactions

and number of accounts that may exist. A large insurance company or bank may have close to a million

separate accounts. Even with computer processing, mailing all statements at month’s end may be

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Learning Guide Dec. 4,2017

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impossible. Many businesses use a cycle billing plan, in which the accounts receivable file is subdivided

by alphabet or the working days of the month; for example, accounts A to H may be billed on the 10 th, I

to P on the 20th, and so on. These plans often have a beneficial effect on a company’s cash flow, because

consumers generally pay bills shortly after receiving them.

Ledger less bookkeeping may be used to streamline receivable procedures in certain situations an

important procedural question is whether copies of sales slips are to be included with monthly

statement. This practice is increasingly uncommon. Usually, individual transactions are itemized on the

statement, with supporting document references by either code or invoice number. A company is

obligated to produce supporting documents at the customer’s request; this demands careful attention

to the details of filing source documents. Owing to the preceding procedural aspects some companies

sell their accounts receivable at a discount to collection agencies. This process, called factoring, avoids

record keeping costs. This alternative should be considered by the analyst. But he or she must also

carefully consider the potential negative effects of factoring on customer relations.

OPERATION SHEET 1: Describe team role and scope

Purpose:

This learning outcome aims to provide trainees with the knowledge, skill and
attitude teamwork. Understanding the concept of teamwork helps to make easy
the daily work activity.

Equipment, Tools and Materials:

 Computer
 Projector
 White board
 White board marker &Duster
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 Lecture room
 Printer

Condition:

Students and trainer’s are legally required to lock the health and safety of trainer.
This applies to all organizations and including voluntary organizations.
 Students must provide safe working environment.
 Students must not put themselves or others at risk.

Procedure:
 Need to establish a team
 Identify the team objective
 Prepare effective common plan
 Apply practically

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Rift Valley University, Mari-Goro Campus Unit: Process Applications for
Credit
Training, Teaching and Learning Materials Development

Self check

1. Accounts receivable represents?

2. Why Accurate reconciliation of subsidiary ledgers to general ledger accounts?

3. Customer transactions are processed?

Learning Guide Date: October 15,2016

Compiled by: RVU,Meri Goro Campus
Rift Valley University, Mari-Goro Campus Unit: Process Applications for
Credit
Training, Teaching and Learning Materials Development

Error records and exception reports are analyzed and responded to according to
standard procedures and within required timeframes
Activity reports monitoring the nature and level of transaction activity are provided
and database records or customer files updated according to standard procedures
and within required timeframes

Types of Sales Order Systems

Information Sheet – 1

Customer records are stored safely, securely and in accordance with standard

processes and recognizing the requirement to protect customer privacy and commercial

confidentiality

Transaction Flows in an Accounts Receivable System-

The main feature in transaction flow of accounts receivable is the separation of the following functions.

Cash Receipts- Customer remittance slips are forwarded to accounts receivable for posting from cash

receipts. Accounts receivable does not have access to the cash or checks that accompany customer

remittances.

Billing- Invoices, credit memos, and other invoice adjustments are routed to accounts receivable for

posting to the customer accounts. This maintains a separation of functions. Billing does not have direct

access to the accounts receivable records.

Accounts Receivable- Accounts receivable is responsible for maintaining the subsidiary accounts

receivable ledger. A control account is maintained in the general ledger department. Debits and credits

Learning Guide Date: October 15,2016

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Rift Valley University, Mari-Goro Campus Unit: Process Applications for
Credit
Training, Teaching and Learning Materials Development

are posted to the customer accounts from the posting media- remittance advices, invoices, and so on-

received from billing and cash receipts. This maintains separation of functions. Periodically, customer

statements are mailed directly to customers by the accounts receivable department. Periodic Processing

also includes the preparation of an aged trial balance of the accounts receivable subsidiary ledger for

review by the credit department. Other types of customer credit reports may be prepared based on the

needs of the company. Such reports are often prepared as a by-product of the processing required to

send customers their statements.

Credit- Credit department functions in an accounts receivable application system include the approval of

sales returns sand allowances and other adjustments to customer accounts, the review and approval of

the trial balance to ascertain customer’s creditworthiness, and the initiation of write-off memoirs to

charge accounts to bad-debt expense. These functions are discussed in what follows.

General Ledger- General Ledger maintains the accounts receivable control account. Debits and credits

are posted to the accounts receivable control account fro the journal vouchers / control totals received

from billing and cash receipts. These amounts are reconciled to the control totals sent to the general

ledger directly from accounts receivable. This reconciliation is an important control in the accounts

receivable application system.

Sales Returns and Allowances-

Sales, returns and allowance typically require careful control. Allowances occur when, because of

damaged merchandise, shortages, clerical errors, or the like, the customer and the seller agree to

reduce the amount owed by the customer. Generally the merchandise is retained or destroyed by the

customer. The amount of an allowance is negotiated between the customer and the sales order

department (or salesperson). The allowance should be reviewed and approved by an independent party
Learning Guide Date: October 15,2016
Compiled by: RVU,Meri Goro Campus
Rift Valley University, Mari-Goro Campus Unit: Process Applications for
Credit
Training, Teaching and Learning Materials Development

(usually the credit department); when authorized, billing issues a credit memorandum to document the

reduction to the customer’s account. Sales return procedures (i.e., for goods actually returned, usually

for full credit) are typically initiated by the receiving department. Once goods are received and returned

to inventory for proper control (this would be evidenced by documentation), the credit manager

authorizes billing to issue a credit memorandum. Note that for both returns and allowances, two

independent parties are required to approve the transaction, and a third party maintains the records.

This is another example of organizational independence in the design of application systems

Write-off accounts Receivable –

The principle of organizational independence also applies in the write off of accounts receivable

procedure. The central feature in a write-off procedure is an analysis of past due accounts, usually done

with an aged trial balance. Numerous techniques are available to collect past due accounts (e.g., follow-

up letters, collection agencies), but some accounts are ultimately worthless. In this case the credit

manager initiates a write-off, which is approved by the treasurer. On approval, accounts receivable is

authorized to write off the account. A copy of the authorizations also sent to an independent third party

(internal audit) for purposes of record keeping. This is necessary because after the write off, accounts

receivable no longer has an active record of the account. Note that internal audit confirms write-offs

directly with the customer to ensure that no collections have been made on written-off accounts. An

employee might intercept a customer’s payment on account and then arrange for the account to be

written off, so that the customer does not continue to be billed for the amount.

Other Revenue-Cycle Application Systems

Every organization defines its own unique application systems. A large organization probably has

several specialized application subsystems within its overall sales and accounts receivable
Learning Guide Date: October 15,2016
Compiled by: RVU,Meri Goro Campus
Rift Valley University, Mari-Goro Campus Unit: Process Applications for
Credit
Training, Teaching and Learning Materials Development

application systems For example; a sales order entry application system might include a separate

pricing or quotation subsystem-a set of files, documents, and procedures used to price complex

products such as electrical generating equipment. Another special subsystem might maintain a

firm’s product or service catalog. The shipping application might include a warehouse subsystem

concerned with converting an order into the exact storage locations that need to be picked. An

automated warehouse system might also generate an optimal path for pickers to take through the

warehouse to minimize travel distance in picking the order. The shipping application might include

a shipper-ordering subsystem concerned with selecting shippers, grouping individual shipments to

minimize freight costs, and controlling all shipments. The finished goods function would maintain

several inventory files, and billing would need its own files and procedures.

Basic transaction processing systems are the source of important tactical and strategic control

information. Data for sales analyses such as product sales by territory, product sales by salesperson,

sales forecasting, customer credit analysis, and other such summarized reports are accumulated by the

transaction processing application systems. Such reports and analyses are common and routine in a

computerized accounting system. It is important to realize that these types of upper-level management

reports cannot be more accurate or reliable than the data on which they are based.

Summary

 A sales order application system comprises the procedures involved in accepting and

shipping customer orders and in preparing invoices that describe products; services and

assessments. The sales order is the interface between the various functions necessary to

process a customer order. These functions are sales order, credit, finished goods, shipping,

billing, accounts receivable, and general ledger.

Learning Guide Date: October 15,2016

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Rift Valley University, Mari-Goro Campus Unit: Process Applications for
Credit
Training, Teaching and Learning Materials Development

 Once credit has been approved, the sales order function distributes the sales order set. One

copy of each sales order is forwarded to billing.

 These are filed as open orders, allowing the billing function to anticipate the receipt of

matching shipping advices from the shipping function. One copy – usually called the

packing slip copy- is forwarded to shipping. This copy authorizes shipping to receive goods

from finished goods for shipping. Another copy – usually called the packing slip copy – is

forwarded to shipping. This copy authorizes shipping to receive goods from finished goods

for shipping. Another copy – usually called the stock copy – is forwarded to finished goods.

This copy authorizes finished goods to release goods from its custody for shipment to

customers.

 The distinction between billing and accounts receivable is important to maintain separation of

functions. Billing is responsible for invoicing individual sales transactions, and accounts

receivable maintains customer-accounts information and sends periodic statements of

accountant to customers. Billing does not have access to the financial records (the receivables

ledger), and the financial records are independent of the invoicing operation. The control total

of postings to the accounts receivable ledger that is sent to the general ledger by accounts

receivable is compared to the journal voucher sent from billing to validate shipping and finished

goods is importance to the establishment of accountability for the release of finished goods

from inventory.

 Accounts receivable represents the money owed by customers for merchandise sold or services

rendered. Because most business is done on credit, accounts receivable often represents the

majority of an organization’s working capital. Accounts receivable also maintains customer

Learning Guide Date: October 15,2016
Compiled by: RVU,Meri Goro Campus
Rift Valley University, Mari-Goro Campus Unit: Process Applications for
Credit
Training, Teaching and Learning Materials Development

credit and payment history information, which is useful in the overall administration of company

credit policies. Conceptually, the accounts receivable procedure is straightforward. A subsidiary

ledger of individual accounts is maintained, with a control account in the general ledger.

Remittance advices are routed from the cash receipts function; credit memos and other invoice

adjustments are routed to the accounts receivable department from the billing department.

Debits and credits are posted to the individual accounts; periodically, statements are prepared

and sent to customers. Aging schedules are prepared as a by-product of sending statements.

Special credit reports may also be prepared.

 Sales, returns and allowance typically require careful control. Allowances occur when, because

of damaged merchandise, shortages, clerical errors, or the like, the customer and the seller

agree to reduce the amount owed by the customer. Generally the merchandise is retained or

destroyed by the customer. The amount of an allowance is negotiated between the customer

and the sales order department (or salesperson). The allowance should be reviewed and

approved by an independent party (usually the credit department); when authorized, billing

issues a credit memorandum to document the reduction to the customer’s account. Sales

return procedures (i.e., for goods actually returned, usually for full credit) are typically initiated

by the receiving department. Once goods are received and returned to inventory for proper

control (this would be evidenced by documentation), the credit manager authorizes billing to

issue a credit memorandum. Note that for both returns and allowances, two independent

parties are required to approve the transaction, and a third party maintains the records. This is

another example of organizational independence in the design of application systems.

 The principle of organizational independence also applies in the write-off of accounts receivable

procedure. The central feature in a write-off procedure is an analysis of past due accounts,

Learning Guide Date: October 15,2016

Compiled by: RVU,Meri Goro Campus
Rift Valley University, Mari-Goro Campus Unit: Process Applications for
Credit
Training, Teaching and Learning Materials Development

usually done with an aged trial balance. Numerous techniques are available to collect past due

accounts (e.g., follow-up letters, collection agencies), but some accounts are ultimately

worthless. In this case the credit manager initiates a write-off, which is approved by the

treasurer. On approval, accounts receivable is authorized to write-off the account. A copy of the

authorizations also sent to an independent third party (internal audit) for purposes of record

keeping. This is necessary because after the write off, accounts receivable no longer has an

active record of the account. Note that internal audit confirms write-offs directly with the

customer to ensure that no collections have been made on written-off accounts. An employee

might intercept a customer’s payment on account and then arrange for the account to be

written off, so that the customer does not continue to be billed for the amount.

 Every organization defines its own unique application systems. A large organization

probably has several specialized application subsystems within its overall sales and

accounts receivable application systems For example; a sales order entry application

system might include a separate pricing or quotation subsystem, a set of files, documents,

and procedures used to price complex products such as electrical generating equipment.

Another special subsystem might maintain a firm’s product or service catalog. The shipping

application might include a warehouse subsystem concerned with converting an order into

the exact storage locations that need to be picked. An automated warehouse system might

also generate an optimal path for pickers to take through the warehouse to minimize travel

distance in picking the order. The shipping application might include a shipper-ordering

subsystem concerned with selecting shippers, grouping individual shipments to minimize

freight costs, and controlling all shipments. The finished goods function would maintain

several inventory files, and billing would need its own files and procedures.

Learning Guide Date: October 15,2016

Compiled by: RVU,Meri Goro Campus
Rift Valley University, Mari-Goro Campus Unit: Process Applications for
Credit
Training, Teaching and Learning Materials Development

Self Check

1. A sales order application system comprises?

2. Once credit has been approved, the sales order function distributes ? These are filed as ?

3. Every organization defines its own unique application systemson the Customer transaction?
Briefly explian?

Learning Guide Date: October 15,2016

Compiled by: RVU,Meri Goro Campus