Professional Documents
Culture Documents
Needs a definite accounting process that makes the system more reliable.
1.2 BENEFITS
Service Management System Accounts Payables and Accounts Receivables
with Treasury Management System
Page 1
1.3 GOALS
Easily updates the Clients/users on what has been paid and defines if
the company maintains or loses financial resources.
Income
Statement
and
Balance
Sheet
has
been
processed
automatically.
Service Management System Accounts Payables and Accounts Receivables
with Treasury Management System
Page 2
It also manage the Treasury Information, where a journal entry and check
preparation has been produced, along with Financial statement Reports.
2.2 DELIVERABLES
Service Management System Accounts Payables and Accounts Receivables
with Treasury Management System
Page 3
APARTMS
undergoes
SDLC
method,
along
with
other
System Development
System Design
System Analysis
Implementation
Mapping or tracing
Formal interviews/surveying/actualization
ID
Task Name
Start
Finish
Duration
12:00 NN
4:30PM
4HRS
Information Gathering
5:00PM
9:00PM
4HRS
9:00 AM
5:00PM
8HRS
1:00 PM
2:00 PM
1HRS
Finalizing
3
the
technical
features
Identifying
systems
System
Design
Specification
System Coding
21, 2014
N/A
System Modelling
N/A
28,2014
7 Days
Functionality (10%)
Impact
(H-M-L)
(H-M-L)
Economical Changes H
Proper Budgeting
Competition
Cheaper Software
User Demands
User-related
Back-ups
Risk Factor
Technical
risks
related
Conducting a proper training for the employees when the system has
been implemented
Form which includes payables table, with amount, date, and description label.
Project Manager
Manayan, Jun
Managing Communication
System Analyst
Langcauon, Joefel
properly
integrated
with
business
requirements
documents.
Interact
with
designers
to
Document
requirements
or
for
designing
Programmer
Cabigas, Jayson
Business focused
System Coding
Program Development
Train
subordinates
in
programming
Diego,
Christian
Mark
Description
Budget Cost
PS1
expenses
are
Php 300 *5
Budget Items
Php 6,500
Description
Budget Cost
Ongoing Cost
Food
expenses
are
absolutely
included
ongoing
for
cost
development.
the
into
the
project Php
1,500
month
Php
1,000
month
Php
2,000
month
Total Ongoing Cost
Php 5,500
JOURNAL
OF
CONTEMPORARY
RESEARCH
IN
INTRODUCTION
In corporate finance trade credit has been supposed to be a nonissue for a long
time, at least in the context of perfect markets (Sartoris and Hill, 1988). Nevertheless, it
is observed that a significant quantity of cash is invested in accounts receivable and an
enormous amount of accounts payable, as a source of financing in nearly all nonfinancial firms (Deloof and Jegers, 1999). Significance of trade credit differs among the
countries and it is expected to be higher in the countries which produce more
manufacturing products, although there is substantial difference across them (Marotta,
1998). Rajan and Zingales (1995) compared non-financial companies in the G7
countries and found that relative part of accounts receivable differs between 29% Italy
and 13% Canada, on the other hand, the respective limits for accounts payable were
17% France and 11.5% Germany. Mian and Smith (1992) reported that in 1986 US
manufacturing firms had 21 percent of accounts receivable of their total assets and
about 40% of account payable of their total liabilities. Deloof and Jegers, (1999)
reported that in 1995 Belgian non-financial firms accounts receivable were 16% of total
assets, and accounts payable 12% of total liabilities. Several studies have been
Service Management System Accounts Payables and Accounts Receivables
with Treasury Management System
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LITERATURE REVIEW
Danielson and Scott (2004) investigated the effect of bank loan availability on
the trade credit and credit card demand of small firms and found that firms increase
their demand for trade credit and credit card debt when facing credit constraints
are imposed by banks. Deloof and Jegers (1999) investigated the role of trade
Service Management System Accounts Payables and Accounts Receivables
with Treasury Management System
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Transaction Cost
Transaction Costs have been declared to be one rationale to sustain
credit sales. Transaction costs theory describes that paying at once for
several shipments collectively saves transaction costs and permits flexibility
in payments (Ferris, 1981).Furthermore, money can be saved by keeping
smaller cash balances.
Financial Models
Financial models are based on capital market imperfections concerning
Price Discrimination
Macroeconomic Conditions
Macroeconomic conditions have also an effect on trade credit usage and
from the level of firms accounts receivables. Still the quantity of trade credit,
a firm offers, is influenced by a demand component (Petersen and Rajan,
1997). This demand on the whole is not possible to compute directly as
approaches of nearly all firms consumers to trade credit varies. This is due
to the reason that, just for example, a retail company can contain thousands
of credit consumers which can be either persons or other firms. Whereas,
the accounts payable of a particular company, can be similar in greater part
as they are payable to the other companies which are comparatively little in
number in any particular industry. As the demand curve for trade credit is
not identified, interpretation of estimated coefficients can help in
understanding this problem.
Petersen and Rajan (1997) found that large firms maintain higher
accounts receivables. One reason for this result can be, the greater access
of larger firms to capital markets which makes them less capital reserved.
Second reason can be the demand component from capital rationed firms
that causes the accounts receivable of larger firms higher than average.
access to capital markets. The natural log of firm age (Ln(1+ firm age)) is used as
Service Management System Accounts Payables and Accounts Receivables
with Treasury Management System
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Internal Financing
The study uses operating cash flow (earnings before depreciation and interest
minus taxes) divided y assets to gauge the firms capability to produce cash from
internal sources to fund the trade credit which it extends to its customers. The
results indicate that internal financing effects positively to the level of accounts
receivables. The variable is positive and significant at (p= 0.00000000) which
indicates that the larger the positive cash flow the supplier has, the higher the
trade credit he is ready to offer to its customers. The results are consistent with
findings of Niskanen and Niskanen (2000) and are contradictory to the findings of
Petersen and Rajan (1997).
AR = 0 + 1CF + 2CM + 3GR + 4KIB + 5SIZE
Model I:
Table
1:
Dependant
Variable:
Accounts Receivable/Assets
0
Coefficient 42.702
15.291*
S.E
26.690
0.110 123.976
3.892
P-Value
R-Square 0.384
0.179
1.197
(0.766)
(0.596) (0.000)
F-Value 45.596*
AdjustedR2
0.376
DW
1.037
(0.000)
*Significant at
= 0. 01 **
Significant at
= 0. 05
Price Discrimination
Price discrimination is an act of billing the same product to different clients
with different prices, even when the costs of supplying them are same. This
practice is mostly observed by monopolists as they exploit their leading power for
discrimination. This study uses ratio of contribution margin (sales minus variable
costs) to assets to proxy for monopoly power to carry out price discrimination. In
our sample of all textile firms existing on Karachi Stock Exchange, it is found that
a significant but a negative relationship exist between price discrimination and
accounts receivable management policies which is validated by a p value of (p=
0.00000004).
These
results
are
contradictory
to
the
findings
of
Niskanen&Niskanen (2000).
supply of trade credit making an assumption that all purchases are on credit.
They believe that this assumption is not very restrictive, as large companies
normally do not pay their purchases in cash. This study also uses the purchases
as proxy to supply of trade credit and considers the same assumption. The result
relating the supply of trade credit is same as expected: a significant and positive
coefficient is obtained (p= 0.0005) which indicates that an increase in the supply
of trade credit increases the level of its use.
II:
5CF + 6PUR
Table
2:
Dependant
Variable:
Accounts Payable
0
2.22140 225.909
9.69028
14.8522
2.51317
89.4942 0.26570
S.E
0.592596 1
(0.0002) (0.0000)
0.10307
0.426306 7
0.02944
0.156219 1
0.64379
R-Square
Adjusted-
0.63970
(0.000
F-Value 157.5394*
0.83927
DW
Growth
Theory suggests that healthier investment opportunities are available to the
firms which are growing and these firms require increased financing for these
new investment opportunities. It is assumed that trade credit may be used as
fractional source of financing for these growing firms. However, opposite is found
from empirical results. Sales growth is found to have a negative but significant
coefficient (p= 0. 0015) which implies that faster a firm is growing the less it uses
trade credit in its financing. Hence, firms growing slowly or not growing at all
utilize the trade credit most. Furthermore, these results are consistent with
Niskanen and Niskanen (2000) and contradictory to the findings of Rajan and
Zingales (1997).
Internal Financing
The results reveal that operating cash flow is a significant variable in
Asset Maturity
In explaining the level of accounts payable the asset maturity, measured
by the ratio of current assets to the total assets, is found to have a greater
proportion with a significant positive variable (p= 0002). This finding is
consistent with the view that firms assets are financed with funds having
same maturities. This is carried out to plan repayments of the funding to
match with the decline in the value of firms assets (Diamond, 1991). As a
result, short-term assets are usually financed with short-term debt just as
accounts payable, while long-term assets are financed with long-term debt
or equity.
2.0
IMPACT
OF
ACCOUNTS
RECEIVABLE
MANAGEMENT
ON
THE
ABSTRACT:
Service Management System Accounts Payables and Accounts Receivables
with Treasury Management System
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Sample, period
Type of relation
Significant negative
1992-1996 period
relation on
profitability
Lazaridis and
Significant negative
Tryfonidis (2006)
relation on
profitability
Gill et al (2010)
Significant negative
relation on
profitability
Garca-Teruel and
Significant negative
Martnez-
relation on
Solano(2007)
profitability
Samiloglu and
Significant negative
Demirgunes (2008)
relation on
profitability
Mathuva (2010)
Significant negative
relation on
profitability
Significant positive
(2011)
relation on
profitability
Significant negative
relation on
profitability
However, the main body of the literature of accounts receivables focuses on studying
in the environment of developed capital markets and during the non-crisis period. The
consequences of a financial crisis on receivables is of enormous relevance, since a
crisis causes trade credit contagion as a consequence of financial contagion between
financial intermediaries (Bastos and Pindado, 2012). Researches on trade credit
during financial crises are done in case on Japan's crisis (Fukuda et al., 2006), for the
Asian crisis (Love et al 2007) and for the recent global financial crisis (Yang, 2001,
Bastos and Pindado, 2012). As to researches that study relationship between
profitability and accounts receivables during current global crisis period, it is worth
mentioning the study done by Baveld (2012). It this study that investigates how public
listed firms in The Netherlands manage their working capital, two periods are
compared - the non-crisis period of 2004-2006 and the financial crisis period of 2008 2009. Baveld'sstudy indicate a statistically significant negative relation between
accounts receivables and gross operating profit during non-crisis period. On the other
hand, during crisis period, no significant relation between these two variables is
observed. This result may suggest that the relation between accounts receivables
and firms profitability is changed in times of a crisis in the way that some firms should
not keep their accounts receivables at minimum in order to maximize profitability
during crisis periods.
Taking into consideration the results of study done by Baveld (2012) and the
others above mention studies, the aim of this research is to examine the impact of
accounts receivable management on the profitability of the Serbian companies during
the financial crisis, in the period 2008-2011.
EMPIRICAL ANALYSIS
Sample and Data Description
OPM
ARRR
RTR
SIZE
LIQ
,044636
,032373
Median
,035425
5,816000 1,587933
Std. Deviation
,067246
,492433
2,478863
Variance
,005
,019
,019
,100
,242
6,145
Skewness
,369
-2,883
1,120
1,151
,408
2,850
,233
,233
,233
,233
,233
Kurtosis
17,716
,692
,867
,016
9,891
,461
,461
,461
,461
,461
,083
Minimum
-,109028 -,846249
,027984 10,0000
4,696000 ,233524
Maximum
,220683
,625985 228,000
7,255000 15,843705
,377185
Table 3 shows correlation coefficients of all variables. ROTA and OPM are dependent
variables. Concerning the explanatory variables, relatively high correlation coefficients
(higher than 0.5) are observed only in case of ARRR and RTR. The results of the
correlation analysis shows that the number of days accounts receivables as well as
accounts receivable to revenue ratio positively relate to both the dependent variables
- return on total assets and operating profit margin. This indicates that in crisis time, a
higher level of accounts receivables could induce a higher profit in the Serbian case.
Contradicting evidence is found with the correlation analysis of Bavald (2009), who
finds a negative relation between the number of days accounts receivables and a
firms profitability in the crisis time in the case of the Netherlands. The results of
Bavald's correlation analysis show a negative relation between the number of days
accounts payables and both return on assets and gross operating profit. This
indicates that managers can create value by keeping the levels of accounts
receivables to a minimum.
OPM
ARRR
ROTA
OPM
(,680)**
ARRR
(,329)**
,142
RTR
(,293)**
,127*
(,959)**
RTR
SIZE
LIQ
SIZE
(,385)**
(,436)**
(,283)**
(,253)*
LIQ
(,298)**
(,405)**
-,116
-,059
,086
Sales and liquidity show also a positive relation on the dependent variables,
which is consistent with the findings of Deloof (2003), and Baveld (2012). A
shortcoming of Pearson correlations, that they are not able to identify the causes
from consequences(Deloof, 2003), will be overcome by the regression analysis.
REGRESSION MODEL
The regression analysis used in this study is based on the following equations:
where OPM and ROA measures the firm profitability, SIZE, the company size as
measured by natural logarithm of sales, ARRR, the accounts receivable to revenue
ratio, RTR, receivables turnover ratio, LIQ, the current liquidity ratio. The analysis
utilizes fixed effect regression model for the whole sample (Table 4).
The results of regression analysis indicate a positive relation between accounts
receivables and return on total assets, which is not statistically significant. Table 4 also
shows a stronger, but positive relation between accounts receivables and the second
dependent variable operating profit margin. This finding is not surprising taking into
account that operating profit margin describes the profitability of sales resulting from the
core business, which is highly influenced by the amount of receivables and the
collection effectiveness.
As it is pointed out by Baveld (2012), the absence of any significant relation for
both the dependent variables may indicate that the relation between accounts
Service Management System Accounts Payables and Accounts Receivables
with Treasury Management System
Page 34
Independent
Std.
t-
Coeff.
Std.
t-
Error
statistic
Sig.
variable
Coeff.
Error
statistic
Sig.
(Constant)
-,280*
,085
-3,281
,001 -,908
,167
-5,445
,000
ARRR
,056
,093
,601
,549 ,306
,181
-1,686
,095
RTR
,041
,039
1,042
,300 ,184
,077
2,397
,018
SIZE
,038*
,012
3,219
,002 ,108*
,023
4,659
,000
LIQ
,008*
,002
3,545
,001 ,020*
,004
4,525
,000
Weighted
statistics
R square
Adjusted
,300
R
,367
,343
,273
square
SE
of
,112
,057
regression
F-statistic
11,033
14,937
Table 4 shows that R-squared value is 0.300 (0.367) indicating that 30% (36.7%)
variance in Return on Total Assets (Operating Profit Margin) as dependent variable can
be explained through four independent variables used.
CONCLUSION
This study explores how large and medium sized companies listed at the
regulated market segment of the Belgrade Stock Exchange manage their accounts
receivables in the most profitable way during a crisis period, from 2008 to 2011.The
analysis of the relation between accounts receivables and two dependent variables on
profitability, return on total asset and operating profit margin, indicates a positive, but
no significant relation. This implies that managers of the most successful Serbian
companies are of the opinion that its profitable, and thus beneficial for their firms, to
support their financially constraint customers by increasing the level of the receivables.
In this way, companies secure their future sales and survival in crisis times. Companies
take into account the trade-off between extending trade credits and increasing the
default risk involved on the one hand, and the short-term and the long-term benefits of
such a receivables management on the other hand. Profitability and creation value for
shareholders over crisis time is achieved by increasing the accounts receivable levels.
This study is featured at least by three main limitations. In the first place, it is
based on the data of the Serbian non-financial firms listed at the regulated market.
Therefore, a generalization of the results of this research for the whole economy
(financial firms, non-listed firms) is not acceptable. Secondly, the analysis is limited to a
four-year crisis period, not taking into account the impact on receivables on profitability
in a previous, non-crisis period. It this way, a comparative approach could not be
applied and the differences between non-crisis and crisis period could not be
compared and highlighted. Finally, the correlation and regression analysis is conducted
using the Return on Total Assets and Operating Profit Margin as dependent variables,
and four independent variables. In this respect, future research should comprise a
more comprehensive set of explanatory variables and should be based on a larger and
comprehensive database.
Service Management System Accounts Payables and Accounts Receivables
with Treasury Management System
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NOTE: This guide is current through the publication date. Since changes mayhave
occurred after the publication date that would affect the accuracy of this document, no
guarantees are made concerning the technical accuracy after the publication date.
Overview
Companies generate accounts receivable by selling goods or services to their
customers on credit. Many companies who extend credit to their customers sell their
accounts receivable to a factor. A factor is a specialized financial intermediary who
purchases accounts receivable at a discount. Under a factoring agreement a company
sells or assigns its accounts receivable to a factor in exchange for a cash advance. The
factor typically charges interest on the advance plus a commission. The price paid for
the receivables is discounted from their face amount to take into account the likelihood
of un collectability of some of the receivables.
Advancing or financing.
There are numerous types of factoring arrangements. Some of the basic types vary the
treatment of credit risk assumption and customer or debtor notification.
Service Management System Accounts Payables and Accounts Receivables
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When the factoring agreement involves the purchase of accounts receivable where the
factor bears the risk of a customer or debtor failing to pay the client for reason of
financial inability it is a non-recourse or without-recourse agreement. In the situation
where the client must bear the risk of non-payment due to financial inability, the
agreement is a recourse agreement. In many instances, factoring agreements provide
for accounts to be purchased on both a recourse and non-recourse basis depending on
the credit worthiness of the customers or the debtors.
Compliance Focus
A strategy has been identified in which multinational corporations use the
factoring of accounts receivable among related parties. The goal of this strategy is to
avoid U.S. taxation by shifting income offshore and to significantly reduce remaining
U.S. income by deducting expenses related to the same income.
Typical Fact Pattern:
A U.S. subsidiary (Taxpayer) of a foreign parent earns sales income and books
accounts receivable. The Taxpayer then factors (sells at a discount) the accounts
receivable to a brother-sister foreign affiliate. The Taxpayer pays the foreign factor the
following fees: a discount; administration fees; commissions; and interest.
The Taxpayer deducts these fees or may net them against gross receipts.
However, the foreign factor does not perform any of the typical services of a factor,
including collection of the Taxpayers accounts receivable. Instead, the
Taxpayer agrees to continue doing all or most of its own collection work on its
accounts receivable. In some cases, factoring arrangements involve the use of a
domestic (U.S. based) factor instead of a factor located offshore. In cases involving a
domestic factor, some audit steps and issues discussed below may not apply. If the
transaction is between two domestic entities it may be structured for state tax purposes
and has no federal tax effect. In addition, insome cases, the Taxpayer and factor may
be engaged in a financing arrangement involving securitizing the accounts receivable.
Submit a specific IDR to determine if any accounts receivable were sold if yes,
were they sold to:
Review the tax return balance sheet to determine if the accounts receivable
reflected thereon are reasonable for the size and type of business.
Perform a comparative analysis of the balance sheets for the current and atleast
5 prior tax years, noting any significant reduction in accounts receivable.
Review the tax preparation work papers for large debits to income.
Review and analyze Form 5472 and the audited financial statements of both the
domestic entity and the related foreign entity for any footnotes reflecting the sales
and/or securitization of the accounts receivable. Request that theforeign entity provide
this information in English. Note whether this analysis demonstrates income shifting
from the domestic entity to the foreign entity. Also note whether there is evidence that
the foreign entity was conducting a trade or business within the United States.
The following facts should be determined during the audit through IDRs or
functional analysis and by requesting documentary substantiation where
appropriate.
The Factor
Name and location of the factor;
The name and location of a common parent of the factor and the taxpayer;
Whether the taxpayer and the factor are part of a consolidated group;
The fees the taxpayer charged the factor for performing the services
contracted back to the taxpayer;
administrative fees;
commission fees;
interest charges.
The date the taxpayer was required to transfer accounts receivable to the factor;
The date the factor had until to accept or deny the factored accounts
receivable;
Whether the sale of the receivables to the factor was recourse or nonrecourse;
The reasons the taxpayer provided for entering into the factoring
arrangement;
Securitization
If the factoring arrangement involves the securitization of factored accounts
receivable then obtain a description of the securitization process including:
The purpose for securitizing the accounts receivable;
The names and location of all entities involved in the securitization process;
Whether any of the entities involved in securitizing the accounts receivable were a
Special Purpose Vehicle (SPV);
A description of how the accounts receivable were securitized, including the flow of
funds;
Whether the sale of the receivables to the factor was recourse or nonrecourse;
Tax Return
Indicate where on the tax return the expenses from the factoring
arrangements are deducted. Identify if the factoring fees are netted
against other items such as sales. Also, indicate if the factoring
deductions are reflected as book/tax difference on Schedule M.
Financial Statements
Indicate if and how the factoring arrangements are presented on the taxpayers
financial statements. Compare the treatment of how the factoring arrangements are
presented on the financial statements with the presentation on the tax returns.
Pricing Study.
To obtain a copy of any and all Transfer Pricing Studies, prepare a separate
IDR consisting of the following two paragraphs:
Please provide within 30 days of this request any principal documentation
outlined in Treas. Reg. Section 1.6662-6(d) (2) (iii) (B) that has been prepared to
support your transfer pricing methodologies for all years under examination. This
information would generally be provided in the form of a study; however all principal
documentation outlined under the Code and associated Treasury
Regulation which was prepared for the years under examination, regardless of
form, is requested. This documentation should include all internal and/or external
studies.
It should be so noted that any documentation prepared by the taxpayer pursuant
to Section 6662(e) must be in existence when the return was filed in order to meet the
documentation requirement. In addition, if this documentation is not provided within 30
days of this request, and if there are significant adjustments to your transfer price as
determined under IRC Section 482, a penalty may be applicable under IRC Section
6662(e) or (h).
Service Management System Accounts Payables and Accounts Receivables
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Identity of the legal form (partnership, corporation, LLC, etc.) of the factor
Identity of the tax form (partnership, corporation, disregarded entity) of the factor.
Identity of the number, names and location of any employees of the factor.
The dates the taxpayer received collection on the accounts receivable; and
The dates the factor had until to accept or deny the transferred accounts receivable.
Prior to July 1998, did the taxpayer utilize Section 475 to mark-to-market its
accounts receivable?
Did the taxpayer start or complete setting up transactions involving the sale of
its accounts receivable to related corporations after July, 1998?
Were any of these corporations created or acquired around or after July, 1998 to
carry out this sale of accounts receivable?
Were any of the valuation services (for the accounts receivable) provided by
the same accounting firm which marketed the transaction? Who provided the
valuation services?
Other
Obtain a copy of the Accounting Manual; Standard Operating Procedures and/or Flow
Charts which describe the corporate factoring/securitization policies and/or procedures.
Obtain all legal, accounting, financial, and economic opinions and memoranda
secured by or on behalf of the taxpayer in connection with this transaction.
The preamble states that for typical transactions with unrelated parties factoring fees
range between 0.35 percent of the face value of the accounts receivable (if the client
retains the collection function) and 0.70 percent of the face value (if the factor
undertakes the collection function).
Accordingly, it may be indicative that a factoring arrangement between related parties
is abusive if the factoring fees are much higher than the typical factoring fees charged
for unrelated parties. This type of analysis should be made in determining whether a
section 482 adjustment is warranted.
Typical Issues:
Service Management System Accounts Payables and Accounts Receivables
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Have the arms-length principles under section 482 been applied with respect
to the sale of accounts receivable to a related party?
Did the foreign factors factoring activities generate income from a trade or
business within the United States?
Should losses from the factoring transaction be disallowed under Section 269
because the factor was acquired or created to evade or avoid incometax?
ABSTRACT
This study empirically examines the determinants of Finnish listed firms
accounts receivable and accounts payable. The results show that accounts receivable
are most likely to be affected by the firms incentive to use trade credit as a means of
price discrimination. Increases in the interest rate level also increases the amount of
accounts receivable through increased demand for trade credit. The most important
determinants for the level of accounts payable appear to be the supply of trade credit,
firm size, interest rate level, the ratio of current assets to total assets, and insufficient
internal financing.
INTRODUCTION
Official statistics show that Finnish manufacturing companies accounts
receivable are on aver-age 9.7% and accounts payable 6.1% of total asset
Service Management System Accounts Payables and Accounts Receivables
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DATA DESCRIPTION
The data sample consists of financial accounting data on firms that were listed on
the Helsinki Stock Exchange either in the main list or in the OTC list during the research
period 1989 1997. For some firms data are available for shorter periods. The entire
sample size is 1018 observations from 121 firms.
Table 1 shows the time-series behavior of median accounts receivable (divided
by as-sets) in firm size quartiles during the research period. Table 2 reports the
respective results for accounts payable. The data have been classified into firm size
quartiles based on annual sales.
The relative amounts of trade credit offered and used remain quite stable during the
research period, and neither accounts receivable nor accounts payable display a trend
in time in any quartile of sales. However, there are certain differences in trade credit
policies between the different quartiles. Especially, firms in the smallest sales quartile
clearly havethe smallest accounts receivable and accounts payable relative to assets,
while differences between the three larger quartiles are smaller and less consistent. The
relative difference between the lowest sales quartile firms and other firms is much larger
for accounts payable. The lowest sales quartile firms borrow from suppliers on average
only 50% compared to the
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Years
Quartile of sales
1989
1990
1991
1992
1993
1994
1995
1996
1997
All years
< 0.25
0.108
0.101
0.102
0.068
0.099
0.106
0.102
0.091
0.119
0.102
0.25 0.50
0.133
0.151
0.129
0.151
0.142
0.177
0.170
0.164
0.148
0.149
0.50 0.75
0.162
0.146
0.125
0.117
0.130
0.133
0.148
0.147
0.128
0.138
> 0.75
0.135
0.134
0.125
0.128
0.129
0.130
0.147
0.141
0.162
0.136
All firms
0.138
0.134
0.119
0.123
0.131
0.132
0.144
0.140
0.143
0.133
Years
Quartile of sales
1989
1990
1991
1992
1993
1994
1995
1996
1997
All years
< 0.25
0.035
0.045
0.025
0.020
0.030
0.027
0.034
0.033
0.039
0.031
0.25 0.50
0.062
0.057
0.045
0.052
0.053
0.071
0.072
0.073
0.080
0.082
0.50 0.75
0.069
0.059
0.054
0.066
0.055
0.069
0.058
0.055
0.058
0.059
> 0.75
0.081
0.075
0.061
0.067
0.070
0.085
0.082
0.079
0.086
0.078
All firms
0.068
0.059
0.050
0.051
0.053
0.071
0.062
0.060
0.071
0.060
median firm of the total sample, whereas the respective ratio when lending to
customers is about 75%.
The result concerning the differences between large and small firms may
not be quite generalizable because there in fact are only large firms in our
sample in the context of the entire population of Finnish firms. However, also
Petersen and Rajan (1997) found that larger firms tend to offer more trade
credit to their customers and they also hold larger balances of accounts
payable. Their results were similar for a sample of large COMPUSTAT firms as
well as for their primary sample consisting of small and medium sized firms.
Median
Median
Median
Median
Accounts
collection
accounts
payment
Receivable
period
payable
period
to total assets
(days)
.147
56
.067
59
.079
55
.041
57
are in parentheses)
.166
44
.133
53
.095
42
.042
74
Total
.133
51
.060
60
these firms balance sheets is only 6.7% of total liabilities. In general, it is true
for all industries that firms hold more accounts receivable than accounts
payable. The medians for the whole sample are 13.3% and 6%, respectively.
RESULTS
We regress accounts receivable and accounts payable on variables that can
be argued to be their determinants based on the theories discussed earlier. We
shortly discuss the theoretical relevance of each variable while presenting the
empirical results from the estimations. Table 4 first summarizes the variables of
primary interest and presents correlations between them.
Accounts receivable
Table 5 presents the results from regressing accounts receivable (scaled
by assets) on the different explanatory variables. 4 Model I in table 5 is
estimated using the variables listed in table 4 above. Since it seems possible
that the relationship of accounts receivable with sales growth and cash flow is
not linear, we estimate model II. The sales growth and cash flow variable are
now both separated into two variables by multiplying them with (0,1) dummies
indicating whether a particular observation has been positive or negative.
Demand for trade credit. It is convenient to think that the level of a firms
accounts receivable depends on how much it decides to lend to its customers.
However, as Petersen and Rajan (1997) point out, there is most probably also a
demand factor that affects the amount of The number of observations varies
slightly across the different regressions because of list wise deletion of
observations with missing data on some variable(s).As it is the common
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variable:
accounts
receivable/assets
Model I (N = 896)
Variable
Coefficient
Model II (N = 894)
Significance
Coefficient
level
. 002
. 094
. 002
. 493
% sales growth
. 0002
. 566
level
. 002
. 289
. 002
. 279
. 008
. 078
. 078
. 046
Significance
. 001
. 227
. 082
. 067
. 007
. 992
Contribution margin
. 091
. 000
. 087
. 000
1 . 198
. 080
1 . 111
. 099
. 094
. 141
. 088
. 159
. 120
. 101
. 113
. 119
. 122
. 069
. 111
. 096
. 126
. 066
. 118
. 081
. 059
. 059
. 054
. 080
. 025
. 138
. 022
. 189
. 031
. 106
. 029
. 123
. 009
. 356
. 008
. 371
. 049
. 000
. 049
. 000
. 041
. 000
. 042
. 000
Other services
. 015
. 133
Constant
. 009
. 790
. 035
. 298
Adjusted R - squared
. 238
. 000
. 248
. 000
. 012
. 203
trade credit a firm is able to extend. This demand is practically impossible to measure
directly. Most firms have many customers whose individual attitudes towards trade
credit differ from each other. For instance, a retail firm may have thousands of credit
customers who may be either individuals or other firms. On the contrary, the accounts
payable of a given firm may be more homogenous since they usually are payables to
other firms whose number at least in certain industries may be relatively small.
Since we dont know the demand curve for trade credit, this issue must be taken
into account when interpreting the estimated coefficients. Petersen and Rajan (1997)
illustrate the alternative interpretations of the result that large firms have higher
accounts receivable. First, this result may mean that larger firms are less capital
constrained because they have better access to capital markets. An alternative
interpretation is that a part of large firms customers may be credit rationed for one
reason or another, and the larger than average accounts receivable of large firms may
be explained by the demand factor. However, we believe that the use of industry
dummies in our regression partly mitigates this problem since they divide the customers
of the sample firms into more homogenous groups.
Creditworthiness and access to capital markets.A firms creditworthiness and
access tocapital markets are most commonly measured by firm size and age. We use
the natural log of the firms total assets (Ln (Assets)) and the natural log of firm age
(Ln(1 + Firm Age)) to proxy for the suppliers access to external capital.
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Growth.Firms may have trade credit policies that are in connection with their target
growthrates. Traditionally, credit terms such as trade credit discounts and time of
payment are believed to be used as competitive tools. A firm willing to grow may choose
a strategy of extending trade credit with longer due periods than its competitors. This
suggests that growth should be positively related to the level of accounts receivable.
However, also firms whose sales have developed inadequately, may use trade credit to
enhance their sales. Especially, a firm whose sales are declining may extend more
trade credit than the average firm in its industry (Petersen and Rajan, 1997). In this
study, we measure growth by the annual sales growth percentage.
Empirically, it appears that neither of the above theories holds. When negative and
positive observations are in the same variable, the regression coefficient is insignificant.
However, when the variable is partitioned on the basis of the signs of the observations,
it appears that the coefficient of the variable with negative sales growth numbers has a
significant positive coefficient. When interpreted, this result means that the more
negative a firms sales growth, the less trade credit it extends. On the other hand, the
coefficient of the variable including positive growth observations is significantly negative
(p = 0.078), indicating that firms with high growth rates extend less trade credit than
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Internal financing
We use operating cash flow (earnings before depreciation and interestminus
taxes) divided by assets to measure the firms ability to generate cash from internal
sources to finance the trade credit that it offers to its customers. The results in Table 5
are mixed and difficult to interpret. When the initial cash flow variable is used, the
coefficient is insignificant. However, when positive and negative observations are
separated into two variables, the variable with positive observations has a negative
coefficient (significant at the 6.7% level), while the variable with negative observations is
insignificant. This result means that the larger positive cash flow the supplier has, the
less trade credit it is willing to extend to its customers. Petersen and Rajan (1997) find
that the firms ability to generate cash internally from operations is statistically significant
but its sign is unexpectedly negative. However, when they elaborate their analysis, they
find that only losses are significantly negatively correlated with accounts receivable, and
conclude that firms in trouble extend more credit to maintain sales. Our results may be
considered exactly the opposite to theirs.
Price discrimination
Price discrimination is a practice whereby different buyers arecharged different
prices for the same product for reasons other than any differences which exist in the
costs of supplying them. Monopolists will often enjoy the power to discriminate in this
way. Our measure for price discrimination is the monopoly power of the firm measured
by the ratio of contribution margin (sales minus variable costs) to assets. (See, e.g.,
Ferguson et al., 1993, for formal derivation and discussion).
Time
Our model includes eight year-dummies to control for annual changes with
1997serving as the control year. All coefficients of the year-dummies are
negative indicating that the level of trade credit was highest in 1997.
Interestingly, the negative coefficients are statistically significant during the
period 19911993, when the economic conditions in Finland were weak. Thus,
it seems that the deep economic recession reduced the amount of trade credit
extended.
Industry
The coefficients of the industry dummies for manufacturing and mining
firmsand for retail and wholesale firms are both positive and very significant.
This indicates that firms in these industries extend more trade credit than in the
two other industries (electricity supply and construction; other services).
Accounts Payable
Table 6 presents the results from regressing accounts payable on their
suggested determinants. The variables (including control variables) are for the
most part the same as above in the model estimated for accounts receivable.
Additionally, there are two new variables: purchases (scaled by assets)
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Dependent
variable:
accounts
payable/assets
Variable
Coefficient
Model IV (N = 909)
Significance
Coefficient
level
Significance
level
Purchases
. 018
. 000
. 019
. 000
. 005
. 000
. 004
. 000
. 001
. 402
% sales growth
. 0006
. 006
. 085
. 002
. 134
. 012
. 000
. 082
. 000
. 083
. 001
. 000
. 128
. 062
. 000
. 043
. 000
. 825
. 037
. 795
. 037
. 076
. 040
. 074
. 039
. 091
. 020
. 085
. 038
. 091
. 020
. 082
. 029
. 088
. 027
. 085
. 026
. 044
. 016
. 041
. 019
. 019
. 049
. 016
. 083
. 027
. 014
. 026
. 014
. 007
. 163
. 007
. 194
. 023
. 000
. 023
. 000
. 047
. 000
. 049
. 000
Other services
. 004
. 528
. 006
. 299
. 062
. 001
Adjusted R - squared
. 241
. 000
. 053
. 281
. 005
. 000
Growth
Theoretically, it may be argued that rapidly growing firms have better investment
opportunities than other firms and would thus be willing to use more trade credit as a
partial source of financing for new investments. However, the empirical results show
just the opposite. As a whole, sales growth is negatively associated with accounts
payable (model III). When this variable is separated into two variables one containing
the positive values (negative values are set to be zeros) and another containing the
negative observations (positive values set to be zeros), both variables are very
significant. On one hand, the coefficient of positive growth is negative indicating that the
faster a firm is growing the less it uses trade credit in its financing. On the other hand,
the larger the sales decrease, the less trade credit a firm will use. Therefore, the
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Internal financing
The results show that operating cash flow is a significant explanatoryvariable for
accounts payable with an initially positive coefficient (model III). However, when it is
separated into two variables (model IV), it appears that the coefficient of positive cash
flows is positive and the coefficient of negative cash flows is negative. This result means
that the most liquid firms use more trade credit than the average firm and the same
holds for firms with negative internal financing. The latter part of this result is consistent
with the notion that firms in trouble use more trade credit, and it is also in line with
Petersen and Rajans (1997) results.
Asset maturity
The proportional share of current assets (current assets/total assets) is a(very)
significant explanatory variable for the level of accounts payable. This is in line with the
theories stating that firms attempt to finance assets of certain maturity with funds having
the same maturity. This is done to schedule repayments of the financial capital to
correspond with the decline in value in the firms assets (Myers, 1977; Diamond, 1991;
Hart and Moore, 1991). Therefore, short-term (current) assets are financed using shortterm debt such as accounts pay-able, while long-term assets are financed using longterm debt or equity.
Time
The results concerning the year-dummies indicate that the level of accounts payable
was highest during the control year 1997. All dummies except that of the year 1996
have statistically significant negative coefficients.
Industry
Industry effects are similar to the regressions for accounts receivable. The
coefficients of the manufacturing and mining industries and the retail and wholesale
industries are both positive and very significant indicating that firms in these industries
use more trade credit in their financing than in the two other industry groups.
CONCLUSION
This study empirically examined the determinants of Finnish listed firms accounts
receivable and accounts payable management policies. The results show that accounts
receivable are strongly affected by the firms incentive to use trade credit as a means of
price discrimination. Market cost of capital also has an effect on their level. The latter
result may be largely explained by increasing demand of trade credit when market
interest rates rise.
All the variables that were used to explain the level of accounts payable were
statistically significant although their signs were not always expected. The results show
that the most important variables behind accounts payable policies are supply of trade
credit, firm size, level of interest rates, asset maturity, and internal (insufficient)
financing.
The results of this study differ in many aspects from previous results obtained using
U.S. data. These differences may largely be due to differences between the Finnish and
U.S. capital markets, since Finland has a bank-based system much like those of
Germany and Japan. Corporate bond markets are basically non-existent, and banks
form the major source of capital even for most large firms. One obvious line of further
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REFERENCES: http://www.htmlpublish.com/convert-pdf-to
html/success.aspx?zip=DocStorage/da1132e3bdaf4baab53963a75cda2442/lta_2000_0
4_a2.zip&app=pdf2word#
PREFACE
This guide accompanies the Auditor-Generals Audit Report No. 29, Management
of Accounts Receivable in the Commonwealth. It is intended toprovide an overview of
the current trends and "better practice" approaches that are being adopted by
organizations in managing accounts receivable.
In the commercial world the way in which organizations manage their accounts
receivable has significant implications for the financial health of those organizations.
This creates an imperative to ensure the management of receivables is both
efficient and effective. The practices used in common business processes such as
accounts receivable management have universal application and are not industry
specific. In this regard there are lessons to be learned by others from the practices
followed by organizations for whom accounts receivable is a core business process.
The better practices discussed in this guide are therefore recommended for
consideration by Commonwealth government agencies.
Not all of the practices outlined in this guide will suit each agencys
circumstances, however, it is considered that most agencies, which derive revenue on
sale of goods and services on credit terms, will benefit from benchmarking their current
practices against those detailed in the guide.
INTRODUCTION
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Risk assessment
Performance Measurement
Centralized Processing
A better practice for the delivery of finance services is the adoption of centralized
processing for finance functions such as accounts payable and accounts receivable.
Centralized processing groups are typically high volume transaction processing centers
servicing multiple operating groups. Their establishment achieves a number of benefits
for the organization. These include the achievement of a high degree of specialist
expertise in the function supported, the establishment of centers of excellence that
develop and enforce common practices and standards and the achievement of cost
efficienciesthrough the co-locating of systems and staff. The establishment of these
centers also frees up other staff for more value adding work.
One private sector firm reduced its total finance staff numbers by 12 per cent
through centralized processing.
Standing Payments
Research into better practice indicates that repayment rates are significantly
enhanced by providing customers and debtors with alternative payment approaches. In
addition to there being alternative payment methods there are also alternatives to
issuing invoices in the traditional accounts receivable processing approach. These
alternative payment strategies result in efficiencies in the management of accounts
receivable.
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Lock Box processing - an outsourced partner captures check and invoice dataand
transmits the file to the client agency for processing in that agencys systems. This
approach transfers the cost of data collection to service provider.
Other payment methods such as use of data kiosks by customers in public use
areas and payment for goods and services via the Internet are likely to become readily
available in the near future.
Each of the above payment types have advantages and disadvantages which are
likely to be peculiar to the environment that particular agencies operate in. Agencies
need to balance the benefits in both the payment and receipting processes against the
costs that some payment options may present to the agencies themselves.
Marketing and educational activities can be used to promote timely payment.
Agencies should provide information on the nature of products or services
available, the required payment cycle, payment options available and the consequences
of non payment.
Customers should be aware of their liability at all times. A practical way of
achieving this objective is the issue of monthly customer statements.
Risk assessment
Risk assessment is a major component in the establishment of an effective
control structure. Once risks have been properly identified, controls can be introduced to
either reduce risks to an acceptable level or to eliminate them entirely. A proper risk
assessment also creates opportunities for freeing processes from inefficient practices.
In managing accounts receivable the key areas that management should focus
on for the purpose of conducting a risk assessment are:
the establishment of clear and concise policies for issuing credit and for
recovery of debt;
allowing staff to apply more initiative and ingenuity to everyday tasks and;
set down criteria against which a debt might be considered for waiver;
Agencies should be aware that the credit term set in a credit policy will have a direct
impact on their terms of trade.
A checklist of features which should exist within a good policy document is included as
an appendix to this Guide.
credit information;
place of purchase;
date of purchase;
special service requirements (will vary with the nature of the service);
method of payment;
customer type.
Systems Integration
Improvements are available from the integration of the revenue and accounts
receivable systems. This integration results in remittances being automatically credited
against a customer account with a simultaneous update of the general ledger. This
process avoids the downloading of data and re-keying.
A fully integrated system could exhibit some or all of the following features:
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quantity, price and account code for sales entered once only, on invoice;
Electronic Commerce
Electronic commerce is a term applied to the use of computer and
telecommunications technologies, particularly on an inter organizational basis, to
support trading in goods and services. It uses technologies such as electronic data
interchange (EDI), electronic mail, electronic funds transfer(EFT) and electronic
catalogue systems to allow the buyer and supplier to transact business by exchanging
information between computer applications systems. This achieves cost savings by
removing the need for direct negotiation between the parties.
The
Commonwealth
government
has
required
departments,
through
prioritize debt on the basis of risk indicators. The indicators could include the
payment history of the customer, debt level, demographics, etc;
Performance Measurement
An integral part of the re-engineering of any finance function is to develop a suite
of indicators which will measure progress over time.
The following tables may be used by agencies both to establish performance
indicators and to measure improvements which result from re-engineering the accounts
receivable process. Each list should be modeled and adapted as necessary to suit the
requirements of individual agencies.
Table 1 is an example of a type of value analysis. Under this approach the data
on time spent on each part of the process would most likely be based on estimates. The
benefit of this approach is that it makes clear to managers the proportion of time that is
spent on non-value adding activities in the accounts receivable cycle. This type of
analysis is not an absolute indicator of cost effectiveness of processing as it takes no
account of costs, however, it does demonstrate the interrelationship between the
various steps in the process and therefore opportunities to reduce non value added
activities.
Table 2 provides examples of the types of performance indicators that agencies
can use to measure themselves against both standard and best practice, at a point in
time and over time.
Value
Hours
Set price
VA
Grant credit
BR
Make sale
VA
Issue Invoice
BR
BR
NVA
Receipt payment
VA
NVA
NVA
Current
Current Target
% Time
Hours
Time
debtor
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Current
Target
Common
Best
Benchmark
Practice
Bench
mark
Efficiency Measures
Invoices
Time Equivalent
1000
5000
2000
8000
(FTE) staff
per
labour
cost
per
invoice/remittance/debt
collection action
Cost of
accounts receivable
0.3%
0.15%
as a percentage of revenue
from credit sales
Cost of
accounts receivable
costs will vary with the nature of invoice production and issue, the nature of
remittance and the type of debt collection actiondependent on nature of businessa
relatively low figure will indicate better practice, however, the level of doubtful debts
Service Management System Accounts Payables and Accounts Receivables
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APPENDIX
The following is a checklist of features which should exist within a good policy or
procedure document.
The policy:
Outlines the agencys rights and duties with debtors; and legal
consequences.
Outlines mode of payment accepted and under what conditions (eg any
transaction less than $1,000 must be by credit card)
Identifies whom has the authority for determining the mode of collecting an
overdue debt (e.g. installments) and identifies circumstances to guide the
decision.
REFERENCE:
www.ahao.gov.au/uploads/.../Management
of
Accounts
Receivable.pdf
ANALYSIS/SYNTHESIS:
The proponents notice the complex process of the AR and AP in different
firms, from household AP/AR to a commercial and business organizations. They
have different Payables components. Same is true in what they receive. But one
thing in common that matters most is the generation of a specifically detailed report
that an accountant can rely on. Though it differs from time-to-time updates (weekly,
monthly, quarterly, annually, etc.), they still spread out the clear details of where the
company's budget is allocated. They also have a good communication along with
the governing bodies of law that constitutes their economical process. Of course,
each company mentioned above has a unique set of computations of their
accounting process. We observed how relevant the AR/AP process in accounting.
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SYNTHESIS/ANALYSIS MATRIX
Rel. Literature Findings
Online-based transactions
Synthesis/Analysis
treasury mgmt.
Due
to
scope
definition,
No banking processes
Report Generation
Generates Report
Credit/Debit presentation
Description/Viewing of AP Displays
and AR
form
of
AP
the
descriptive
update,
generated in the GL
issues
to
business anomaly
being Business
avoid considered,
rules
but
is
being processed
also Follows
the
legal
way
minimal definitions.
of
Questionnaires :
1. Can we have the origins of the previous system being used?
4. Can we know how you compute the AP/AR in your existing system?
9. Do you use Receiving Reports? How it goes along with the system?
12. How do you update your account payables and receivables? Is it weekly,
monthly, quarterly, etc?
15. When using the system, do you have in mind that you must have an assistant?
Why or why not?
19. Just in case, what particular perspective do you want to your existing system to
change?
Software development team can avoid risk by getting all the details of the
equipment that are provided or accessible to them.
Client can avoid risk by making all necessary business changes before
initialization of request.
Risks
Probability
Impact
Employee Risks
40%
Process Risks
35%
Product Size
30%
Development Risks
Insufficient resources
30%
Customer Risks
20%
Technology Risks
Obsolete technology
10%
Business Impact
10%
Description
Catastrophic
Critical
Marginal
Negligible
Unwanted changes
Irresponsible members
Use of laptops/computers:
The proponents need to make sure that all inspectors at the facility are
Login:
The proponents need to make sure that the person logged in will only
have access to the certain parts of the application, this depends on the rights
granted to the users. The proponents must explain to each user why they are
not able to use some of the certain parts of the applications.
SOFTWARE CONFIGURATION MANAGEMENT PLAN
1.0 INTRODUCTION
Identify change
During the software development phase, a member of a team
APPROVE CHANGE
The proponents want to be able to have the control over any
change/s within the software. The proponents cant afford to have one
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Identify change
Once the change/s are identified, a change request form will be
produced and will be send to all the proponents of the project team.
Control change
After the evaluator got the change request form, change report form
will be generated.
Once the change/s are approved, the project team will document
the change in the library.
Define constraints
Verbal communication:
Since the software development team is small and all the team
Emails
Cabigas, Jayson
(Business Analyst/ Analyze
Business process)
Langcauon, Joefel
(Lead Programmer/
Handling system software
process)
to
Accounts
Payable
and
Accounts
Receivables
with
Treasury
Management System.
1.2.1 GENERAL REQUIREMENTS
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A way in which they could view data that has been entered
into the database prior to our software.
Interface Enhancements
The APART MS will provide an interface enhancement to
the user could retrieve and save data and information at ease
with the use of MS SQL database.
1.3 SYSTEM CONTEXT
Eventually, multiple users will be using the product altogether. Therefore,
concurrent connection will be an issue for implementation. Also, because of
eventual use, it can encounter technical issues.
1.4 MAJOR CONSTRAINTS
-
TIME
The proponent has been given 10 months to finish all project
MONEY
Lack of financial support is one of our major constraints. We
PERSONNEL
Since this is a group work, others cant perform the creation
3.1.7 LEDGER/T-ACCOUNTS
To provide a view of financial reports being paid and received can be seen.
Definite journal is been exported directly to GL, while importing financial updates
with BCMS and PMS.
It includes Treasury Account for viewing, so that any amount that has been
declared as Receivables or Payables, it can be updated into the Treasury IS.
A way in which it can import and export valuable data in other related IS.
A way in which they could view data that has been entered into the
database prior to our software.
Interface Enhancements
The APART MS will provide an interface enhancement to achieve
the user-friendliness and usability functionality that is requested by the
client / users.
Database Administrative Interface
The APART MS will provide a secured database on which the user
could retrieve and save data and information at ease with the use of MS
SQL database.
TIME
The proponent has been given 10 months to finish all project charter, software
copy, and other add-ons. The proponents is been pressured due to a short time
period, and some changes of the system process has been considered.
MONEY
Lack of financial support is one of our major constraints. We cant have a
PERSONNEL
Since this is a group work, others cant perform the creation of system software.
Those who are assigned in creating the project documents have also need other
members to research for the related literature of the proposed IS.
2.0 USAGE SCENARIO
This section will define the user level of the Accounts Payable and Accounts
Receivable with Treasury Management System (APART MS). This will define the user
type and the accessibility level upon logging in into the system.
2.1 USER PROFILES
The Accounts Payables and Accounts Receivables with Treasury
Management System (APART MS) will have the following levels of users:
Time
Funding
to
Accounts
Payable
and
Accounts
Receivables
with
Treasury
Management System.
1.3 GENERAL REQUIREMENTS
The following general requirements were laid out for our project named
APARTMS:
A way in which it can import and export valuable data in other related IS.
A way in which they could view data that has been entered into the
database prior to our software.
Interface Enhancements
The APART MS will provide an interface enhancement to achieve the
user-friendliness and usability functionality that is requested by the client /
users.
Database Administrative Interface
The APART MS will provide a secured database on which the user could
retrieve and save data and information at ease with the use of MS SQL
database.
1.4 SYSTEM CONTEXT
Eventually, multiple users will be using the product altogether. Therefore,
concurrent connection will be an issue for implementation. Also, because of
eventual use, it can encounter technical issues.
Service Management System Accounts Payables and Accounts Receivables
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TIME
The proponent has been given 10 months to finish all project
MONEY
Lack of financial support is one of our major constraints. We
PERSONNEL
Since this is a group work, others cant perform the creation
Accounts
Receivable
Login
Main
Screen
Accounts Payable
Treasury
Password
Maintenance
Menu Items
The following shows the Architecture of the main menu:
Treasury
AP/AR Reports
Assets
Tax Declaration (ask on hand)
Quit treasury
Back to main menu/main screen
Password Maintenance
Change password
Add user
Exit
Back to main menu/main screen
3.1.2 CREATE AR ENTRY
Accounts
Receivable
entry
ass vendor
input details
print invoice
update
Treasury
Invoice
inquiry
select
vendors
name
view AP
records
print
reports
AP and AR
records
select vendors
to view AP or
AR
view AR
records only
print reports
AP and AR
records
select vendors
to view AP or
AR
view AP
records only
print reports
AP and AR
records
select records
to view AP or
AR
view AP
andAR
records
print reports
MAIN INTERFACE
SAMPLE REPORTS OF AP
VENDORS INQUIRY
Unit Testing
o MS SQL Database
o PC Application
o Java Net Beans
Integration Testing
o MS SQL Database
o PC Application
Portability Testing
o MS SQL Database
o APART MS
o PC Application
Security Testing
o MS SQL Database
o APART MS
o PC Application
Performance Testing
o MS SQL Database
o APART MS
o PC Application
The proponents has a limitation on the time to test the proposed system at
the clients when it comes to testing because of we cannot test the proposed
system during the companys working hours.
The proponents have limited funds for testing, the proponents only have one
laptop to make software testing for APART MS. It means that the proponents
cannot test the software using laptop / PC from other brand and other
hardware specification that is lower / lesser price than of the laptop / PC that
the proponents are currently using.
The proponents dont have enough manpower to perform the software testing and
identify the results. This might be the reason for not be able to test the APART MS into
the larger user base.
2.0 TESTING PLAN
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Recovery Testing
In this type of testing method, the proponents are concerned with the
ability of the software to retrieve lost data. The proponents want to make
sure that the software is fault tolerance and does not loose data in case of
system shutdown or if the system ceases.
Security Testing
in this type of testing method, the proponents wants to make sure that
the security checks are working properly and no one is able to temper with
the data except the head manager and employees.
Stress Testing
In this type of testing method,
Performance Testing
In this type of testing method, performance bounds are set during the
design part of the software being developed. This bounds will help the
proponents in determining the effectiveness of the software. It will also
help the proponents to minimize stress level that is caused to user
because of our software.
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The Proponents
Companys PC
Software Applications
System Testing
-
To be scheduled
To be scheduled
To be scheduled
System Implementation
-
To be scheduled
Members:
Manayan, Jun I.
Goron, Mac Douglas P.
Cabigas, Jayson C.
Langcaoun, Joefel
San Diego, Mark Christian R.