‘Order to Cash’ Outsourced Operations

Process Manual

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Procedure Manual – Order to Cash

1.1 Customer Master File

Objective- To create and maintain customer master account with complete and accurate details.

Key Risk Indicators –

ƒ New master creation without approval as a percentage of total customer masters created
during a period.
ƒ Number of duplicates in the customer master

Create Customer Master Account

Input –
1. Approved Requests from Client for creation of new customers
2. New Account Set up form

• Sales Representative at the client end updates New Account Set up form with the relevant
information. The form provides the Identification information (Name, Address, Contact Name,
Phone Number, Fax number, Sales Representative), Billing Information (such as Address of
the billing place, phone number, Invoice Type, Freight and Handling charges), Business
Information (such as Trade reference, Currency, Type of customer, Credit limit, Terms of
payment) and Tax information (such as Tax exemption certificate number).
• The request form has certain mandatory fields without which the request will not be
processed. The sales representative collects data completely into the form.

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Procedure Manual – Order to Cash

Process
• Sales Representative sends every New Account Setup form to the Approver at the client
for approval. The request form is completed and approved and then directed to the
Associate IBPO. The generation, approval and sending of the account setup form can be
system driven (digitized) or can be manual.

Digitized process

i. New Account Creation Form is completed within the application

ii. On completing the required details / fields within the form, the same is submitted to
the approver at the client end for approval through the application menu option.
iii. On receipt of approval from the Approver, the request comes to the Associate’s
queue as approved request for processing and the associate IBPO processes the
request.

Manual process
i. New Account Creation Form is completed by the sales representative (Client) and
mailed to the approver at the client end
ii. The approver manually signs the form and sends it for processing.
iii. The receipt of the approved form by the associate IBPO can again be manual
(through mails) or through a workflow. In case of a workflow tool, refer process above
(pt no. iii)
iv. In case of receipt of the approved forms through mail, the associate IBPO checks for
the approval signature and then completes processing the master in the application.

• Associate IBPO will validate the availability of the details / supporting documentation
(such as tax information) and also completion of all the mandatory data required in the
form, before processing the request. The associate communicates with the respective
departments within the client, mostly through email, and obtains confirmation of the data.
The request for master creation is processed only on ascertaining the accuracy and
completeness of the data.
• Associate contacts the listed trade references and determine if the client’s past payment
history is acceptable
• Based on approval and necessary documents, associate IBPO updates the details of the
customer and a new customer account with a unique customer number is created in the
system
• Associate IBPO checks for duplicate customer accounts, using unique identification fields
such as Tax Certificate Number and Address. In case a duplicate account is noted, the
same is notified to the client.
• Post creation of a new customer account, credit limit exposure verification is done. For
this, group companies / parent company / related companies, if they are existing
customers of the client company, are identified and the overall exposure for the group as
a whole, including the new customer, is calculated. In case the credit limit exceeds the
amount allocated for the group, either an approval is obtained from the competent
authority (Client) to increase the credit limit or the maximum limit that can be allowed
within the overall exposure is decided.
• Based on the above judgment, the credit limit is allocated to the new customer.

Output - New Customer Master

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Procedure Manual – Order to Cash

Customer Master Updates

Key Risk Indicator –

Customer master data updates without approval as a percentage of total customer masters
created during a period

Input - Customer Master Update form

Process

• Sales Representative sends an Update request for any change in the Customer Master
data. The request can be for change of any data related to the customer, such as
Address, Email ID, Phone number, Tax Certification number and terms of payment.
• Associate IBPO verifies the base documents for proof of the modification / update
request and verifies approvals for the update, before making the changes in the
Customer Master data.

Output - Updated Customer Master

Critical Success Factors-

• Ensure that customer master is created / updated based on approved requests having
mandatory information.
• Ensure that customer master is created / updated accurately- for the correct information
as specified in the requests and within timelines as agreed with the Client.
• Check for duplicate customer accounts already existing in the master records.
• Adequate segregation of duties is maintained between the update of standing data and
the maintenance of financial records like creation of sales order, sales invoice, etc

Key Performance Indicators

• Time taken from receipt of approved request to creation/update of customer master

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Procedure Manual – Order to Cash

Process: 1.0 Order to Cash

Sub Process: 1.1 Customer Master File

Sr Automated/ Preventive/
Control Objective Control Activity
No Manual Detective
1.1.1 Customer Master Data is accurate and The Customer Account is created only after necessary Manual Preventive
complete approvals and review of details

The Customer account is created only after mandatory Automated Preventive

information has been updated

1.1.2 Approved changes are input for processing All changes to Customer Master Data are approved Manual Preventive
completely and accurately. prior to input. Each change is supported by sufficient
documentation
For changes in certain types of standing data and /or Manual/Automated Detective
changes outside certain parameters – such as
enhancement to credit exposure limit, the system
produces a report of these changes which is reviewed
for supporting documentation and approval.
1.1.3 Only authorized users have access to Access to Customer Master Data is restricted to Manual Preventive
customer master data and duties are authorized users only. Segregation of duties is
adequately segregated maintained between the update of standing data and
the maintenance of financial records (i.e. posting or
approval of adjustments, reconciliations, etc).
1.1.4 Customer Master Data is accurate and up-to- Reports of customers who have not placed orders Manual Detective
date within a specified period of time are reviewed to ensure
that customer master file data remains pertinent.
Master files are periodically analyzed for old or
duplicate records. Customer Accounts not used for
specified period marked as inactive.

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Procedure Manual – Order to Cash

1.2 Create Sales Order

Objective- To create complete and accurate sales order in a timely manner

Key Risk Indicators

• Number of customer complaints about order processing delays / errors

• Number of orders offering special discount without adequate approval

Input- 1 List of unbooked orders

2 Purchase order details from customer

Process-

• In case of digitized order booking process the input is the list of unbooked orders extracted
from the system. The list is generated when the distributors/customers place orders online
through the client’s web portal. In case of manual receipt of order, the order is processed
based on the purchase order details received from the client

Digitized Process

I. The customer/distributor places the order online through the client’s web portal from
where the details get updated in the system through an automated interface between the

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Procedure Manual – Order to Cash

client’s web portal and the application. The Associate IBPO downloads the list of
unbooked orders at regular intervals. There are two rounds of validation done. The first
round of validation is done by the system automatically based on certain defined
parameters like customer name, address etc. In case the system is unable to validate the
details, the associate IBPO manually checks the details and rectify if there is any
discrepancy.

II. In the second stage the associate IBPO checks other details of the order such as ‘Bill To’
address, ‘Ship To’ address, Freight details, mode of delivery, pricing terms, terms of
payment; validate these details with the customer master records and discuss with the
Client’s sales team in case of any difference

Manual Process

I. Associate IBPO receives the Purchase order from the customer/distributor through email

II. Associate checks the Customer name/ Customer number in the Purchase order with the
details in the Customer Master and select the appropriate address as mentioned in the
Purchase order.

III. Associate enters the following details in the sales order-

a. Product details as provided in the Purchase order and the standard price of the
product as provided will be captured from the Pricing list
b. Quantity of the product required as per the Purchase order
c. ‘Bill To’ address, contact details, email address etc
d. ‘Ship To’ address, in case it is different from the ‘Bill To’ address
e. Freight details, mode of delivery and terms of payment

IV. The manual orders created by associate is subjected to independent review to ensure
accuracy of the details

• On verification of the details, associate IBPO books the order and a Sales Order with unique
order number gets created in system.

• In case an order is received from a customer whose name is not appearing in the Customer
Master, the associate sends an email to the appropriate authority in the master maintenance
team for creation of customer master. In case any customer information is missing or
incorrect, the associate sends an email to appropriate authority (Client) for approval for the
change and then notifies the master maintenance team for updating the customer master
with correct information. The person having access to process sales order should not have
access to create/change the customer master

• Associate IBPO checks the nominated discount amount for each customer order. In case the
discount offered is more than the standard rate of discount, associate checks for proper
approval before processing the order

Output- Sales Order

Critical Success Factors-

• Sales order is created after verifying the customer information in the Purchase order and
the Customer Master records.
• Ensure that sales order is created - for the correct information as specified in the
requests and within timelines as agreed with the Client.

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Procedure Manual – Order to Cash

• Ensure that special discount is offered only on the basis of proper approvals
• Adequate segregation of duties is maintained between creation of sales order and
maintenance of customer master, receipt of sale proceeds, etc.

Key Performance Indicators

• Number of orders processed during a specified period

• Accuracy of customer orders processed

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Procedure Manual – Order to Cash

Process: 1.0 Order to Cash

Sub Process: 1.2 Create Sales Order

Sr Automated/ Preventive/
Control Objective Control Activity
No Manual Detective
1.2.1 Orders are recorded completely and A manual or system check is performed to ensure Manual/ Automated Preventive/
accurately documents are not duplicated or fall outside of a Detective
specified range of numbers. All rejected, suspense, or
missing orders are researched, corrected and re-
entered on a timely basis.

Sale orders have fields for all pertinent order

information including: item descriptions, quantities,
price, price adjustment mechanisms, delivery
requirements, freight terms, taxes, and payment terms.

Key data fields must be made mandatory and

populated to process a sales order. Any entries with
invalid, missing or incomplete information are rejected
and it is researched, corrected and re-entered on a
timely basis.

Prices/discounts are prepopulated in the system from

authorized price lists or standing data before orders are
processed and cannot be overridden. If prices need to
be overridden, IBPO associates will do the same only
based on necessary approval from Client.

A one-for-one check between the sales order source Manual Detective

documents (i.e. customer initiated purchase order,
signed contract etc.) and the sales order occurs. Any
discrepancies are identified and re-entered. The check
occurs again for re-entered data.

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Procedure Manual – Order to Cash

Process: 1.0 Order to Cash

Sub Process: 1.2 Create Sales Order

1.2.2 Duplicate sales are not recorded. The system shows a warning message on the basis of Automated Detective
customer name/number, purchase order number, item,
etc to prevent duplicate creation of sales order

1.2.3 Sales terms and prices are approved. Sales orders over a set threshold (limit set in the Manual Preventive
application) require approval by management before
acceptance by the system. The lack of approval
creates a suspense file that is reviewed by
management for clearance on a regular basis.
1.2.4 Orders are processed within approved Orders are automatically blocked by the system if the Automated Preventive
customer credit limits. customer's credit limit is exceeded.

Access to release blocked orders is restricted to

authorized personnel.

Segregation of duties ensures that person responsible

for order entry does not have access to release
blocked orders.

Approval limits for releasing block orders have been

established and are enforced through system
configuration or manual discipline.
1.2.5 Sales to fictitious customers (on credit) are Verify customer information against approved customer Manual Preventive
prevented and detected. standing data (i.e. addresses, credit limits, etc.). Where
items do not match, the request gets rejected and is
sent back to the Client for appropriate action.

1.2.6 Duties are adequately segregated. Only appropriate users can enter sales orders into the Manual/Automated Preventive
system. These people do not have access to set up
new customers accounts or make changes to standing
data.

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Procedure Manual – Order to Cash

Process: 1.0 Order to Cash

Sub Process: 1.2 Create Sales Order

Appropriate segregation of duties should be
maintained. (For example, consider segregation of the
following functions and duties: order entry, determining
credit limits, inventory custody, shipping, invoicing,
returns acceptance, returns approval, credit note
approval, cash receipts, cash disbursements, bank
reconciliations, approval of bank reconciliations, A/R
accounting/maintenance, and G/L maintenance
functions.) Exceptions noted are investigated and
resolved. If management accepts incompatible duties,
appropriate mitigating controls exist.

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Procedure Manual – Order to Cash

1.3 Order Release

Objective- To process and release orders after proper review of the customer accounts to ensure
that orders are released within the credit limit and other parameters

Key Risk Indicators-

• Number of accounts exceeding the credit limit

• Number of orders put on hold as a percentage of total number of orders

Input-
• Order details

Process-

• There are two types of customer- Term and Prepay. Term accounts are given a specified
credit period; Prepay customers have to make the payment while placing the order. Credit
card customer is a category of Prepay account. The Client’s onsite team updates the order
details in the system

Term Accounts
I. System automatically releases the orders within credit limit, no past dues and with low/med
risk. The Associate IBPO reviews other orders and check the defined parameters like
Credit limit, past dues, D&B risk, payment history, etc.
II. Past Due- Associate IBPO will not release the order if there is a past due invoice of the
customer beyond the specified credit period. Associate IBPO contacts the customer and
inform him to make the payment for the past due invoice and then his order will be
released. On receipt of sufficient evidence of payment from the customer (for e.g. scanned
copy of check and tracking number of the check delivery), associate IBPO releases the
order. Periodic Reports to be made available for review to ensure that orders have been
released only after necessary back up documents have been obtained/Client approvals
have been taken.
III. Over Credit limit- Associate IBPO can release orders even though the account is over
credit limit based on the specified limit agreed upon with the Client. Orders exceeding the
credit limit over the specified amount can be released by the Supervisors IBPO based on

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Procedure Manual – Order to Cash

the approval matrix as agreed with the client. Otherwise on receipt of request for increase
in credit limit associate can apply for same. (Refer Credit limit assessment process)
IV. Associate IBPO releases the order and updates the reason for same. Once orders are
released, the order confirmations are generated and send to customer. The shipment
advice is generated and send to warehouse for dispatch of goods.

Prepay Accounts

I. Associate checks the Customer account in the system to verify the receipt of payment as
updated by the client or refer the Bank’s report for confirmation of receipt of payment in
respect of the order concerned. On confirmation of receipt of payment against the
respective order, the order is released. In case of wire payment, a Wire remittance form is
send to IBPO – Cash Application team to apply the payment against the corresponding
invoice. In case of web payment, the Client verifies the web payment based on the
confirmation number received from the customer and the IBPO associate releases the
order.

Credit Card accounts

I. Credit card sales orders are updated in accounting application by Sales team or customer
along with credit card details to be charged for processing the order.

II. Credit card online system runs the checks and provides authorization for amount, zip code
and CVV number. If all checks are validated, 6-digit card authorization code is updated in
the order and order gets released.

III. If any of the validation condition fails, order goes on hold and application update reason
code in authorization field. These orders need to be released manually. Each reason code
needs different action to release the order manually.

IV. Associate IBPO checks for pending orders on hold and tries to release for current date.
Associate reviews each order on hold and releases each order manually. The credit card
online system then performs the checks again. If order is released, 6-digit authentication
code is updated in “authorization code” filed.

V. If order is declined, decline code is updated under “authorization code” field. Based on the
decline code, necessary comment is updated in the order screen for necessary action by
sales team.

VI. Associate do follow-up with sales team/credit team via mail to resolve the identified
discrepancies in the order.

VII. After removing discrepancies, sales team/credit team send mail and request for re-
releasing the orders. Based on the request for re-release the order, associates tries to re-
release order again.

• If any account has been put on hold, the associate can release the orders after proper
approval. Moreover during the account review, the associate can mark the account on hold
whereby orders cannot be released without review.

Output-

• Shipping Advice for dispatch of goods

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Procedure Manual – Order to Cash

Critical Success Factors-

• Ensure that payment has been received or there is no past due invoice or the order is
within the credit limit
• Orders of the accounts put on hold are released only after proper approvals

Key Performance Indicators

• Number of orders released in a given time period

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Procedure Manual – Order to Cash

Process: 1.0 Order to Cash

Sub Process: 1.3 Order Release

Automated/ Preventive/
Sr No Control Objective Control Activity
Manual Detective
1.3.1 Orders are processed and released correctly Orders are released after review of the accounts, past Manual Preventive
and accurately due outstanding and credit limit In case of prepay
accounts, orders are released only after receipt of
payment

Orders once released from the system cannot be Automated Preventive

viewed again and no risk of repeated processing of the
orders

1.3.2 Only authorized users have access to release Access to Order Hold Release is restricted to Manual Preventive
orders and duties are adequately segregated authorized users only and is segregated from order
entry/determining credit limits/shipping, invoicing/credit
note approval/cash receipts functions.
List of all such cases is reviewed at periodic intervals.

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Procedure Manual – Order to Cash

Process customer invoice

Objective- To invoice the customers accurately and timely for the goods/services provided to
ensure adequate cash flow

Key Risk Indicators-

1. Number of billing queries

Input-

1. Sales order Listing

2. Invoice request form

Process-

• Invoice processing process relates to billing the customer for the goods and services
provided. In today’s ERP environment most of the invoicing activities are automated and
system generated
• On creation of shipping advice, the goods are dispatched for delivery. On confirmation of
the delivery of goods, the warehouse updates the system with the Delivery note number
• Once the goods issue process is completed, invoices are generated by running a batch
program and send to the customer. However the invoice processing process is captured
in the procedure manual to envisage an outsourced environment

Digitized

• Associate IBPO receives the list of sales order number form the client for which
invoice has to be created

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• Associate creates the invoice on the basis of sales order number and all the
information is captured from the sale order
• Associate checks the invoice amount, quantity, discount, tax amount, etc and after
confirmation, process the invoice
• Once the invoice is created, it is send to the customer via email/fax or mail

Manual

• Associate receives a list of Invoice request form from the client

• The invoice request form contains the following information
o Invoice date
o Customer number
o Payment terms
o Email address
o Bill to address
o Description of the sale
o GL credit account code
o Invoice amount
• Associate checks the duplicate invoice before creating the invoice. The duplicate
check is done based upon the customer name, amount and description. In case of
duplicate invoice request, the associate returns back the request along with proper
reasoning
• Associate validate the information of the invoice request form with the back up details
like contract, pricing database, customer database, etc
• On validation of all the information, associate enters all the relevant data for invoice
creation and Invoice gets created in system.
• A separate individual performs a 100% audit of all the invoices created to ensure that
all the requests are processed accurately and timely
• The invoices created by the associate IBPO are reviewed by the client and posted
• Associate IBPO sends the invoices to the customers via email/fax
• In case of any error, invoices can be deleted before posting. But if any error is
identified after posting, a negative invoice is created based on the Credit request
form

Output

1. Invoice

Critical Success Factors

• Ensure that invoice is created accurately based on information specified in the requests
and within timelines as agreed with the Client.
• Check for duplicate invoice based on customer name, amount and description of order.
• Only appropriate users can generate sales invoices and duties are adequately
segregated (e.g. between generating sales invoices and cash receipts)

Key Performance Indicators

1. Number of invoices processed during a given period of time

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Procedure Manual – Order to Cash

Process: 1.0 Order to Cash

Sub Process: 1.4 Process customer invoice

Automated/ Preventive/
Sr No Control Objective Control Activity
Manual Detective
1.4.1 Sales invoice is generated for every approved Upon approved release of a shipment from the Manual / Preventive
shipment and recorded in the proper period. warehouse the system automatically produced Automated
invoices with the same date. Shipping dates cannot
be modified with out approval by the appropriate
levels of management.
1.4.2 Invoices generated represent the actual Sales personnel reconcile control totals of the Manual / Preventive /
goods shipped. invoices generated for the day with the total Automated Detective
shipments per the shipping system. A manual or
system check is performed to ensure data is not
duplicated or falls outside a specified range of
numbers (check can be preventive or detective). All
rejected, suspense or missing items are researched,
corrected and re-entered on a timely basis.
1.4.3 Price, amount, and other information on the System edits exist to validate invoice data input (for Automated Preventive
invoice are correct. example, customer name and number, pricing,
amounts and other information) against approved
standing data and the sales order system. Invalid
data is rejected for re-entry or stored in a suspense
file where it is researched, corrected and re-entered
on a timely basis to ensure completeness.
Client's approval is required for discounts and Manual Preventive
allowances in excess of predefined limits. Invoicing
personnel examine the sales order for evidence of
appropriate approval before input. All such cases
without approval are reviewed by Client for clearance
on a regular basis.

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Procedure Manual – Order to Cash

Process: 1.0 Order to Cash

Sub Process: 1.4 Process customer invoice

Automated/ Preventive/
Sr No Control Objective Control Activity
Manual Detective
1.4.4 Duplicate recording of invoices is prevented. A manual or system check is performed to ensure Manual / Preventive
invoice numbers are not duplicated or fall outside a Automated
specified range of numbers (check can be preventive
or detective). All rejected, suspense or missing items
are researched, corrected and re-entered on a timely
basis.
1.4.5 Only appropriate users can generate sales Billing system access is appropriately restricted to Manual Preventive
invoices. those with functional responsibility.

Only appropriate users can generate sales invoices

and duties are adequately segregated (e.g. between
generating sales invoices and cash receipting)

User access is periodically reviewed by management.

1.4.6 Invoices are recorded in the appropriate Cut-off procedures have been established to ensure Manual / Preventive /
period. that sales are recognized in the proper period Automated Detective

Goods shipped at, before, or after the end of an

accounting period are scrutinized and/or reconciled to
ensure complete and consistent recording in the
appropriate accounting period including the raising
and recording of the related invoices.

Sales invoices and shipping logs are pre-numbered

(should be system defined) to assist with recording.

"Invoices not shipped” and “shipped not billed” control

report are used as a method to ensure proper period-
end cutoff.

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Procedure Manual – Order to Cash

1.5 Off-Invoice Discounts:

This document describes the process to be adopted for processing of customer claims in respect
of Off-Invoice Discounts. Off-Invoice Discounts refer to discounts offered by suppliers that are not
included on the invoices. These will typically include:
Discounts by way of Price Protection – Where price drop is offered by the Vendor and the same
is passed on to the customers
Marketing Allowances – Where Vendor reimburses customers for specific marketing programmes

Key Risk Indicator

• Number of duplicate claims received for processing

Price Protection:

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Procedure Manual – Order to Cash

Marketing Claims:

Input:

1. Price Drop Details announced by Vendor

2. Vendor Policy on Notifications and Eligibility criteria
3. Stock Statements submitted by Customers
4. Contracts between Vendors and Customers
5. Copy of Invoices submitted by customers

Process:

Price Protection Discounts:

• IBPO Associates will receive details of Price Drop from the Vendors. The same is updated in
system along with the effective date and the value of the price drop.

• Verification is done to ensure that all information and notifications received from vendors are
captured accurately in the system.

• IBPO associates handling processing of Customer Claims in respect of price drops will
download details of price drops updated. This report lists the SKUs for which a price drop has
been announced and updated in system.

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• IBPO associates will determine if the Customer is eligible for the rebate in respect of price
drops, as per the criteria specified by the Vendor.

• Notifications are sent to all eligible customers as per Clients policy. Notification is sent along
with claim forms to be filled and submitted by customers. The following details are captured in
Claim Forms:
o Customer Details
o SKUs for which the customer is eligible for price drop
o Price drop per SKU,

• Critical Fields in the notifications such as SKU Number, Price drop per SKU etc are non-
editable fields. Customer will only fill the quantity details for which price drop is claimed along
with relevant documentary evidence.

• IBPO associates will log all claims received from customers for tracking the status of the
same. Thereafter all claims are validated. Claims Validation is done based on the following
parameters:
o Verifying Stock Statements submitted by the customer to ascertain whether the same is
as on the effective date of the price drop. Only system generated inventory reports are
accepted as valid documentary evidence. Where any manual reports are submitted, the
same will be accepted only based on specific approvals from the Client.
o Verifying whether the inventory on hand pertains to the lot purchased from the client
during the look back period. (by verifying the client part number and the Invoice/PO of the
client.)

• IBPO associates will also check if the claim submitted by the Customer is a duplicate one or
not. This will be done by verifying the open claims against the customer and by reviewing
credits/Return Material Authorization in the customers account.

• Based on validation done, claims submitted by customers are accepted or denied. In case of
denied claims, IBPO Associates will inform the customer. Status of claim is also updated in
the Log Sheet.

• IBPO associates will submit all validated claims to the vendor for approval along with the
necessary backup documents (inventory report, copy of notification sent to the customer,
purchase history of the customer). This will be done based on terms agreed with vendors.

• Once approval is received from the Vendor, IBPO associates will raise debit memos on the
Vendor.

• Credit memo is raised on the customer for the eligible amount. Credit Memo will carry details
of Claim submitted by the Customer and also the scheme details announced by the Vendor.

• Where approvals are not required, debit memo is raised on the Vendor and the customer is
credited for the price protection amount.

• At the time of raising debit and credit memos, IBPO associates will verify if the same is raised
for the validated quantity and value only.

• Depending on the value of the claim, IBPO associates will also obtain specific approvals from
the Client based on the authorization matrix defined before raising debit notes on the Vendor
and crediting the customer.

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Procedure Manual – Order to Cash

• In respect of price protection for stocks held by Client, where eligible, IBPO associates will
submit relevant stock statements to the Vendor and get approvals for the same, before
debiting the Vendor for the differential amount.

Marketing Claims:

• In case of marketing rebates, Vendor and Customers enter into agreements upfront. These
agreements would identify the period for which the agreement valid and the criteria to be
fulfilled for claiming the same.

• IBPO associates will process all claims received from customers towards these rebates and
discounts, validate the same with Vendor Policy and raise debit/credit memos for the same.

• IBPO associates will receive claims submitted by the Customers towards these rebates along
with relevant backup documents. IBPO associates will validate the same on the following
parameters:

o Whether a valid contract exists between the vendor and the customer
o Whether the claim is for specific activity mentioned in the contract.
o Whether claim falls within the contract period
o Whether the claim amount is within the contract value
o Whether the invoice pertains to the validity period of the contract

• IBPO associates will also check whether the claim is a potential duplicate one. This is done
by reviewing the list of claims logged based on Customer Number and Vendor Number,
Customer account will also be reviewed to ascertain whether the customer has already been
credited for the rebate amount. Thereafter IBPO associates will start processing the claim.

• For all validated, non-duplicate claim submitted by the Customer, IBPO associates will raise
debit notes on the Vendor. Vendor Approvals will also be taken for all claims above the pre-
defined value prior to raising debit memos.

• Credit Memos are also raised on the customer for the Marketing rebate passed on to them.
Depending on the value of the claim, specific approvals are sought from the Client.

Critical Success Factors:

• Ensuring that all notifications are updated accurately and on a timely basis in system
• Ensuring that notifications are sent to customers who comply with criteria as specified by the
Vendor
• Verifying with necessary back-up documentation prior to processing of claims – includes
Stock Statements/Copy of Agreement/Invoice Copy. Associates should also verify adequacy
of back up documentation
• Obtaining all necessary approvals prior to processing of claims

Key Performance Indicators

• Number of claims processed during a given time period

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Procedure Manual – Order to Cash

Process: 1.0 Order to Cash Cycle

Sub Process: 1.5 Off-Invoice Discounts

Automated/ Preventive/
Sr No Control Objective Control Activity
Manual Detective
1.5.1 Data is input for processing accurately and Notifications received from the Vendors are tracked for Manual Detective
completely. ensuring that all notifications are updated in the
system.
Data in respect of Price Drops that is updated in the Manual Detective
system is independently verified for ensuring accuracy
and completeness.
1.5.2 Debit/Credit Memos are raised in accordance Notifications are sent out only to eligible customers Automated / Preventive
with defined policies and based on necessary based on the criteria defined by the Vendor. Manual
documentary evidence.
IBPO Associates will raise debit Memos/credit Memos Manual Detective
only after necessary documentary evidence as defined
by Client (Stock Statements/Invoice Copies etc) are
submitted.
All such documentary evidences are verified prior to
processing of debit/credit memos.
1.5.3 All Debit/Credit Memos are duly authorized. Necessary approvals are sought from the vendor prior Manual Preventive
to billing of claims submitted by customers, depending
on the value of the claim. Claims pending for approval
are followed up with the vendor for taking the same to
closure.

Based on the value of the claim and pre-defined

authorization matrix, necessary approvals are sought
from the client before the claim is billed.

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Process: 1.0 Order to Cash Cycle

Sub Process: 1.5 Off-Invoice Discounts
Automated/ Preventive/
Sr No Control Objective Control Activity
Manual Detective
1.5.4 Debit/Credit Memos are raised for claims IBPO Associates will verify whether credit/Return Manual Preventive
approved by the vendors. Merchandise Authorization (RMA) has already been
issued to the customer by reviewing all credits in the
customer account. Where the claim has already been
processed, customer is informed of the same and the
duplicate claim is rejected.
Claims Log Sheet is maintained for tracking all claims Manual Preventive
received till their closure. Details of debit/credit memo
numbers are updated in the Log Sheet.
1.5.5 Duties are adequately segregated. Billing of Claims is segregated from logging and Manual / Preventive
validation of claims. Persons who are responsible for Automated
logging claims do not have access to the billing menu.
Access rights are defined and enforced by the client.

Once claims have been billed, option to edit/modify the Automated Preventive
same is not allowed to IBPO Associates.

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1.6 Collection Process

Objective- To mobilize collections from customer and encourage them to make prompt payment

Key Risk Indicators-

• Number and value of customer accounts referred to Legal department

• Number and value of customer accounts having outstanding for more than 90/120 days
• Bad Debt as a percentage of revenue
• Number of dishonored checks per million/billion dollars in sales

• Invoices unpaid after the credit period are classified in different buckets based on the
number of days it is past due ( for e.g. 30-40 days, 40-60 days, 60-90 days, 90-120 days
and more than 120 days)
• Associate IBPO reviews the buckets and prioritize the customer accounts to make the
collection call selecting top 10 accounts for each bucket in descending order. The
collection agents scrutinize the past due accounts by printing an ageing report from the
system on a weekly basis and updates a ‘Collections Note’ spreadsheet with past due
accounts that require action.
• Associate IBPO starts following up the customer at least few days before the due date
encouraging them to make payment
• System automatically generates Dunning letters and Demand letters after specified days
past the credit period and is send to Customer and Sales Representative
• Based on the defined collection process, the agents contact the customers for whom
demand notice had been sent for follow up on payment status and collection. The
Associates IBPO updates the details of the call in the ‘Collections Note’
spreadsheet/Notes screen in the system.

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• If the associate is not able to make the collection after 2-3 efforts it is escalated to the
Supervisor IBPO. The Supervisor IBPO will make the collection calls and try to make the
collections. In case of customers having payment problem, the Supervisor may suggest
alternate payment options to the customer within the terms and limits agreed upon with
the client or may refer the matter to the Client for appropriate course of action. The
Client’s Manager will do the final collection call and after that the account is referred to
the legal department for recovery.

• The Supervisor IBPO, as part of weekly / monthly review, prints the ageing reports, maps
the same with the Demand notes, ascertains collections made during the week/month
and compares it with the receivable outstanding at the start of the week/month.
• Accounts past due for a long period (say, more than 120 days) are put on hold from
further business transactions. All such accounts are released only after receipt of money
or based on approvals from Client.
• Depending on the set guidelines, The A/R manager also includes notes on the status
reports identifying the reasons for hold.

Interest

• Interest is charged on amount outstanding beyond the due date at a specified rate of
interest. However there can be exception for interest computation in case of small
amount of outstanding.
• Interest invoice is generated on a monthly/quarterly basis and send to customer.
• Customer can request for waiver of the interest and on approval from the Supervisor,
Customer Services waives of the interest and raises a credit note in the system.

Dishonored checks

• The associate IBPO receives a list of dishonored checks from the client and put the
respective accounts on hold in accordance with Clients Policy.
• Associate makes calls to the customer to pay the balance amount plus the Non sufficient
fund charges if required as per Clients Policy and to provide a letter of explanation for
check dishonor
• Customer provides the letter of explanation and associate forwards it to the supervisor
• Supervisor reviews the letter of explanation and decide on the future terms of payment
for the customer within the terms and limits agreed upon with the client or refer the matter
to the Client’s manager. If required the account may be converted to a prepay account

Customer Enquiry

• The associate IBPO receives customer complaints/enquiry over phone/email etc. The
associate updates the enquiry database with the details of the call.
• If the response/solution to customer enquiry/complaint is available, the same is provided
by the associate and the database is updated accordingly.
• If the response/solution is not available, it is researched and root cause analysis is done
to provide the response/ solution to the customer. The details of the response/solution
are updated in the database.
• The Supervisor, IBPO reviews the enquiry management database on a regular basis to
identify any unresolved queries.

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Critical Success Factors

• Collection calls are made to customer at least few days before the due date and
customers should be prioritized based on ageing and value.
• Dunning and Demand letters are generated automatically by the system after specified
days from due date and are send to customers.
• Accounts outstanding for a long period of time are put on hold from further business
transactions.

Key Performance Indicators

• Day Sales Outstanding

• Number of delinquent accounts processed per week / month
• Average days to get response to a demand letter for an overdue account
• Average age of accounts placed for collection
• Percentage of remittance processing with errors
• Recovery rate (gross amount and percentage collected)
• Average number of collection calls completed per delinquent account
• Percentage reduction in the outstanding amount of the associate’s portfolios
• Percentage of AR balance due for more than 30 days
• Dishonored checks processed in a given time period

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Procedure Manual – Order to Cash

Process: 1.0 Order to Cash

Sub Process: 1.6 Collection Process

Automated/ Preventive/
Sr No Control Objective Control Activity
Manual Detective
1.6.1 Collection calls are made and demand letters The Past due accounts are automatically segregated Automated Detective
send to all the past due accounts into different buckets based on the past due days and
system automatically generate demand letters if the
account is past due for a specified period.

The Supervisor reviews the ageing report and Manual Detective

compares the collections made during the period with
the amount outstanding at the beginning of the period

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Procedure Manual – Order to Cash

1.7 Customer Receipts:

Objective- To record for application of receipts/remittances from customers. Customers deposit

money via different means - Lock boxes, Wire transfers, Credit card and Automated Clearing
House. IBPO Associates receive details of amount remitted by customers through different
means and apply the same to the Customer Accounts.

Key Risk Indicators

• Percentage of payments mismatched / remain unmatched in the system

Input:

1. Images of checks received from customers

2. Details of Invoices against which remittances are made
3. Remittance information from Bank

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Process:

Lock Boxes:

• In case of Lock Box collections, IBPO associates receive details of amounts deposited by
customers across various lock box locations of the clients’ bank on a daily basis.

• Details include Customer Name, Customer Account Number, amount deposited, details of
invoices for which remittance is made and the check’s image.

Wire Remittance:

• In case of wire remittances, IBPO associates download details of amount deposited by

customers in client’s bank accounts. IBPO associates directly log on to the bank’s website for
downloading the remittance details. This download is done at pre-defined intervals. This
would include details of invoices against which remittance is made as well.

• In some cases, customers mail details of the invoices against which the remittance needs to
be applied to the IBPO associates.

• Details of amounts received via Wire Remittance including amount are entered in the system
which are used by IBPO associates for processing. Receipts Numbers will be allotted by
system automatically for all remittances received.

• IBPO associates also compare the control total of the amount entered with the amount as per
the statement downloaded for ensuring accuracy and completeness of data entered. This will
include verification of transaction count as well.

Credit Cards:

• In case of credit card remittances, IBPO associates receive details of amounts received
through credit card payment from the client or by logging directly onto the bank’s website.
Details received include card type and amount remitted.

• Necessary date for applying the collections are received from the respective Credit
Representatives, based on which IBPO associates apply the remitted amount against
outstanding invoices.

Payment Application:

Digitized Process:

• Remittance details are upload in the system and Auto-Match process is run. Remittances get
matched against the outstanding invoices for each customer account.

• All unmatched remittances will be reviewed by IBPO associates, resolved and posted to the
Customers Account.

Manual Process:

• For each customer, IBPO associates first select the invoices and compare the amount
outstanding on these invoices with the amount deposited by the Customer. Where the two
matches, cash is applied against the outstanding amount.

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Remittance Discrepancies:

• Where amount is deposited by the customer without giving any relevant back up details,
IBPO associates will post the same as an account payment. IBPO Associates will follow up
with the credit representatives/customers for getting appropriate back up for the same.

• Else, IBPO associates enter the check number in the system and mentions the receipt as
payment received on account. Thereafter, credit representatives handling such customer
accounts will contact the customer and get the back-up details for the payments. Once the
same is received, IBPO associates apply the amount against the corresponding invoices.

• Where the amount remitted by the customer (short receipt) is less than the amount
outstanding on the invoices, the same is reviewed by IBPO Cash Application team. Short
remittances within the defined tolerances are written off.

• IBPO associates raise claims on customers / post ‘short receipts’ entry for all short
remittances exceeding the pre-defined tolerances. Credit department follow-ups with the
customers for recovering the same.

• Where any excess amount is deposited by the customers, IBPO associates post the same as
excess receipts for credit representatives to review.

Output:

1. Applied Cash Receipts

2. Claims on Customers for short remittances

Critical Success Factors

• Ensuring that all receipts are applied correctly and accurately against the customer
account within timelines as agreed with the Client.
• Ensuring that unapplied cash receipts are reviewed and applied manually.
• Reviewing the short payments within the tolerance limits made by Customers over a
defined period - To identify repetitive trends and launch collection efforts accordingly.

Key Performance Indicators:

• Percentage of payments applied automatically by the system

• Average Time to resolve a remittance mismatch

• Number of days between receipt and posting of payments

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Procedure Manual – Order to Cash

Process: 1.0 Order to Cash Cycle

Sub Process: 1.7 Customer Receipts

Sr Automated/ Preventive/
Control Objective Control Activity
No Manual Detective
1.7.1 Cash receipts are accurately recorded and in Bank Statement is reconciled with cash receipts Manual Detective
the appropriate period. recorded in the system on a periodic basis.
Reconciliations are reviewed and approved by
appropriate personnel.
1.7.2 Cash receipts relate to sales made and are Receipts are applied to the customer accounts based Automated/Manual Preventive
posted to the correct customer account, on matching of customer name, customer number and
invoice number. Matching is done only against open
invoices in the customer account.
Unapplied Cash receipts are reviewed and applied
manually.
1.7.3 All cash receipts are input for processing. Control Totals of Cash Receipts from lockbox Manual Detective
receipts/wire remittance/credit cards are compared with
the total of cash receipts posted to the customers
account.
Differences are investigated and rectified on a timely
basis.
1.7.4 Duties are adequately segregated. Duties are adequately segregated between the Automated/Manual Preventive
following functions - order entry, determining credit
limits, inventory custody, shipping, invoicing, returns
acceptance, returns approval, credit note approval,
cash receipts, cash disbursements, bank
reconciliations, approval of bank reconciliations, A/R
accounting/maintenance, and G/L (maintenance
functions.)

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1.8 Customer Returns

Objective- To accurately and completely record the sales return and provide adequate credit for
it.

Key Risk Indicators-

• Number of invalid returns

• Number and value of excess value invoice created

Input

• Customer request for return

• Return Material Authorisation

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Process

• The customer may return the goods because the original goods supplied were defective
or the original goods were lost or shortshiped

Defective Goods
• On receipt of goods, if it is defective, the customer informs the Customer Service about
the Defective goods. Customer Service assess whether it is a genuine request. In case of
genuine request, the return is accepted and Customer service enters the following details
in the system-
o Customer number
o Corresponding invoice number
o Number of units returned
o Reasons for return
• Customer Service raises a Return Material Authorisation Invoice and sends the RMA
number to customer. If the return is rejected, Customer Service informs the customer
accordingly.
• The customer sends the defective goods to the warehouse with reference to the RMA
number within a specified period of issuance of RMA. Warehouse inspect the returned
goods and updates the notes in the system
• In case of valid return, the Customer Service provides replacement and raises a
Replacement Order Invoice. The Associate IBPO checks the replacement order invoice
and the RMA invoice and releases the replacement order. Customer Service raises a
credit memo in the system. Associate IBPO matches the credit memo with the
replacement invoice.
• In case of invalid return, warehouse accordingly updates the notes and Customer
Services cancels the RMA. Customer Service raises an Overgood Fee invoice (Charges
for reshipping). However on request of the customer and there being a valid reason, the
Sales team can waive the Overgood fee.

Lost/Short Shipment

• In case of lost/short shipment, the customer raises a claim with the customer service for
no receipt of goods ordered or short receipt of the ordered quantity
• Customer Services may accept or reject the claim on prima facie analysis of the claim. If
the claim is accepted it raises a credit memo for the quantity lost or short shipped,
otherwise rejects the claim and inform the customer accordingly
• Customer service thereafter investigates the matter with the Shipping company and
accordingly either approves or rejects the claim
• In case the customer service approves the claim, the IBPO Associate matches the credit
memo with the original invoice. In case of rejection of claim, the Customer service
cancels the Credit memo.

Credit Cards

• In case of credit card customers, the payment is received by charging the card at the time
of order release and same has to be reversed when customer returns the goods.
• On receipt of return request from the customer, the customer service raises a RMA in the
system and a credit memo in the system.
• Associate IBPO checks the original invoice number against which return is accepted and
ensures that there is no unpaid replacement invoice for the customer. Associate also
checks the credit card number mentioned in the credit memo and in the original invoice
and checks the “Do Not Credit list’ to ensure that the customer name is not appearing in
the list. Once all validation checks are met, the associate changes the status of open

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credit memo as blocked to avoid purging/matching of particular credit memo in with open
entries by other users.
• During the validation check if there is unpaid replacement entry against the original
invoice no, the charge back will not be processed and the associate intimates the details
to credit department via e-mail. The credit department performs offsetting of credit memo
with the replacement entry. (manual purging of offsetting Dr/Cr entries in application).
• If the credit card number in the credit memo is not matching with the one mentioned in
the original invoice, request is not processed without approval mail from appropriate
authority from credit department. Similarly If customer names is appearing in the Do Not
Credit list, request is not processed unless the customer’s name is removed from the “Do
not Credit list”.

No replacements
• If the returned product cannot be replaced, Customer Service may consider the following
options-
o Credit Memo- Customer service raises a credit memo and associate match the
credit memo with the original invoice
o Credit letter- Customer Service sends a Credit Letter to the Consumer. The
letter is valid for 12 months and can be adjusted against future orders
o Refund- If the problem is not solved through product replacement Customer
Service may consider to refund the Customer in case payment has already been
received

Critical Success Factors

• Ensure that replacement invoice is released after proper review and credit memo is
correctly applied to the replacement invoice and within the timelines agreed with the
Client.
• Ensure that in case of credit cards order, the credit memo is applied after all the
validation check and there is no unpaid replacement invoice.

Key Performance Indicators

• Number of replacement invoice processed

• Time taken to process the replacement invoice

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Procedure Manual – Order to Cash

Process: 1.0 Order to Cash

Sub Process: 1.8 Customer Returns

Automated/ Preventive/
Sr No Control Objective Control Activity
Manual Detective
1.8.1 All the return are authorized and in Returns from customers must be physically verified, Manual Preventive
accordance with Company return policy reviewed and approved by appropriate personnel in
line with established and updated return policies

All returns must be authorized and/or made in

accordance with policy in advance by appropriate
personnel
1.8.2 Product returns are processed completely Returned goods are subject to typical receiving controls Manual Preventive
and correctly such as counting, inspecting and noting quantities and
condition.

Returns must be authorized and given a Return

Number as reference for Invoicing or Refund for proper
monitoring

1.8.3 Returns are appropriately accounted Returns are accounted for appropriately in inventory, Manual Preventive
AR, sales and general ledger

Restocked returned goods inventory is reconciled to

return goods advices on a periodic basis.
1.8.4 Returns are reviewed and processed in the Unprocessed sales returns should be reviewed at Manual Detective
correct period month-end to ensure accounting in the proper period

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Procedure Manual – Order to Cash

1.9 Credit Limit Review and Assessment

Objective- To review credit limit granted to customers on a periodic basis

Key Risk Indicators-

• Number of customer accounts expired for credit limit review

Input-
• Customer background and business performance
• Customer’s past activities
• Financial reports
• External credit rating reports
• Future business potential

Process
• Associate IBPO review all the customer accounts once in a specified period, generally once a
year. The review process is spread across the year to ensure that all the accounts are
covered. Each account has due date for review and if the account is not reviewed within the
review date it gets flashed
• The customer accounts are classified into different categories based on monetary limits and
risk ratings.
• Customer accounts below a specified monetary limit and assigned a low/medium risk are
reviewed automatically by the system based on certain set parameters like Average day
sales order, volume of business, existing credit limit, average delinquency, etc
• Associate IBPO manually review the customer accounts above specified monetary limit or
high risk accounts or the ones generated as exceptions from the system review
• The manual review is done at least 30 days prior to the review date to ensure that all the
accounts are reviewed
• Associate IBPO collects various information about the customer like his business
performance, financial statements, Annual reports, payment history, volume of business, etc

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Procedure Manual – Order to Cash

• In case of closely held business, associate collects information from external credit agencies
like Dun & Bradstreet, Credit Risk Monitor, etc.
• Associate IBPO calculates various statistical ratios based on the information gathered and fix
a credit limit for the customer. The analysis is done in a standard template which includes all
the past information also.
• Associate IBPO can also put Hold on customer accounts based on review and after obtaining
necessary approvals from Client, where required.
• Associate IBPO sends the revised credit limit list to the client for review and updation along
with the detailed analysis

Output
• Updated Credit limit

Critical Success Factors

• Ensuring that all the customer accounts are reviewed within the timelines agreed with the
Client.
• Ensure that various information related to customer are collected from different sources and
analyzed in a standard template

Key Performance Indicators

• Number of accounts reviewed during a specified period

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Procedure Manual – Order to Cash

Process: 1.0 Order to Cash

Sub Process: 1.9 Credit limit review and assessment

Automated/ Preventive/
Sr No Control Objective Control Activity
Manual Detective
1.9.1 Credit limit review is done for all the Each customer account is assigned a review date and Automated Preventive
customer accounts once in a year system pops up a flash signaling the expiry of review
date for a customer account
1.9.2 Credit limit review is done on an objective Low risk customer accounts are reviewed automatically Manual Preventive
basis based on certain defined parameters while the
remaining accounts are manually reviewed

The review is done in a standard template and after

gathering all the relevant information from different
sources

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Procedure Manual – Order to Cash

1.10 Process Customer refund

Objective- To process the customer refunds accurately and in a timely manner

Key Risk Indicator-

• Number of refund request without adequate approval

Input-

• Refund request from customer duly approved by appropriate authority

Process

• Refund request comes from customer when either customer is having credit balance with
client and prefers to get back amount instead of adjusting it with future purchases or
customer wants to close the account with the client
• Credit department receives refund requests from the customer. Credit department reviews
and validates the customer’s refund request and valid requests are approved by the
appropriate approving authority.
• Credit department forwards approved refund request through mail for processing refund claim
to Associate IBPO
• On receipt of refund claim request, associate validates that refund claim is approved by the
appropriate approving authority as per client’s authority matrix and check for refund order
number in the refund credit approval mail.
• If refund verification criteria are not met, refund claim requests are returned back to requestor
giving reason for denial. Requestor reviews and rectifies the discrepancies and resubmits the
request for refund claim processing.
• Associate IBPO update the refund request in a standard Refund Order form mentioning the
customer number, Customer account name, address and refund amount.
• Forward Updated Refund order from along with original refund request to Treasury /AP team
for further processing and issuing refund amounts to customers.
• Associate post credit memo entry in the accounting application for each refund request

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Procedure Manual – Order to Cash

Output-

• Customer refund

Critical Success Factors

• Ensuring that refund claim is approved by the appropriate approving authority as per
client’s authority matrix.
• Ensuring that refund claim is processed correctly and within the timelines agreed with the
Client.

Key Performance Indicator-

• Number of customer refund request processed during a specified period

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Procedure Manual – Order to Cash

Process: 1.0 Order to Cash

Sub Process: 1.10 Process customer refund

Automated/ Preventive/
Sr No Control Objective Control Activity
Manual Detective
1.10.1 Customer refund is approved and validated All the customer refund requests are validated and then Manual Preventive
approved by appropriate authority before being
processed

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