AIS - CH 14

accounts receivable aging report

A report listing customer account balances by length of time outstanding. The report provides useful information for evaluating current credit policies, for estimating bad debts, and for deciding whether to increase the credit limit for specific customers.

back order

A document authorizing the purchase or production of items that is created when there is insufficient inventory to meet customer orders.

balance-forward method

Method of maintaining accounts receivable in which customers typically pay according to the amount shown on a monthly statement, rather than by individual invoices. Remittances are applied against the total account balance, rather than specific invoices.

bill of lading

A legal contract that defines responsibility for goods while they are in transit. It identifies the carrier, source, destination, shipping instructions, and the party (customer or vendor) that must pay the carrier.

cash flow budget

A budget that shows projected cash inflows and outflows for a specified period.

credit limit

The maximum allowable credit account balance for each customer, based on past credit history and ability to pay.

credit memo

A document, approved by the credit manager, authorizing the billing department to credit a customer's account. Usually issued for sales returns, for allowances granted for damaged goods kept by the customer, or to write off uncollectable accounts.

customer relationship management systems (CRM)

Software that organizes information about customers in a manner that facilitates efficient and personalized service.

cycle billing

Producing monthly statements for subsets of customers at different times. For example, each week monthly statements would be prepared for one-fourth of the customers.

electronic data interchange (EDI)

The use of computerized communications and a standard coding scheme to submit business documents electronically in a format that can be automatically processed by the recipient's information system.

electronic funds transfer (EFT)

The transfer of funds through use of online banking software.

electronic lockbox

A lockbox arrangement (see lockbox) in which the bank electronically sends the company information about the customer account number and the amount remitted as soon as it receives payments.

factoring

Selling accounts receivable at a discount to a firm that specializes in collections of past-due accounts.

financial electronic data interchange (FEDI)

The combination of EFT and EDI that enables both remittance data and funds transfer instructions to be included in one electronic package.

lockbox

A postal address to which customers send their remittances. This Post Office box is maintained by the participating bank, which picks up the checks each day and deposits them to the company's account. The bank sends the remittance advices, an electronic list of all remittances, and digital copies of all checks to the company.

monthly statement

A document listing all transactions that occurred during the past month and informing customers of their current account balance.

open-invoice method

Method for maintaining accounts receivable in which customers typically pay according to each invoice.

packing slip

A document listing the quantity and description of each item included in a shipment.

picking ticket

A document that lists the items and quantities ordered and authorizes the inventory control function to release that merchandise to the shipping department. The picking ticket is often printed so that the item numbers and quantities are listed in the sequence in which they can be most efficiently retrieved from the warehouse.

remittance advice

A copy of the sales invoice returned with a customer's payment that indicates the invoices, statements, or other items being paid.

remittance list

A document listing names and amounts of all customer payments received in the mail.

sales invoice

A document notifying customers of the amount of a sale and where to send payment.

sales order

The document created during sales order entry listing the item numbers, quantities, prices, and terms of the sale.

universal payment identification code (UPIC)

A number that enables customers to remit payments via an ACH credit without requiring the seller to divulge detailed information about its bank account.