The Acquisition/Payment Process CHAPTER 7 The Acquisition/Payment Process

The acquisition/payment process includes the business events associated with buying, maintaining and playing for goods and services needed by the organizations. Objective of the acquisition/payment process is to provide needed resources for the organization’s conversion processes when they are needed. Organizations acquire a variety of goods and services. These include inventory, supplies, human labor, property, plant, equipment and fixed assets.

Request for Goods/Services (Monitor Need) Events Event description Event risks Events Documentation Real Data Maintenance Examples of Information Outputs Purchase Goods/Services Events Event Description Events Risk Event Documentation Real Data Maintenance Receive Goods/Services Events Event Risk

Decision Support Requirements of The Acquisition/Payment Process Disburse Cash Event Event Description Event Risk Event Documentation RAL Data Maintenance Examples of Information Outputs Decision Support Requirements of The Acquisition/Payment Process Traditional information customers for a typical acquisition/payment process include top management, buyers, receivers, accounting, treasury and vendors. The primary internal agents who perform the work of this process are buyers, receivers and disbursement clerks. Selecting the vendor is perhaps the most critical aspect of the buying decision Continuous improvement ideas relating to the acquisition/payment process

Traditional Automated Sales/Collection Process Flowchart-Shipping EXHIBIT 6-4 Traditional Automated Sales/Collection Process Flowchart-Shipping From mail room Picking list (amended) Performed by shipping clerk Packing list Edit data concerning picked goods Shipping file Packing slip 2 1 Bill of lading To carrier and customer To billing File shipping notice Enter data concerning goods delivered to shipping Print shipping document Pack goods with packing slip enclosed and ship Performed by shipping clerk Error and exception display Reference C

Traditional Automated Sales/Collection Process Flowchart-Cashier EXHIBIT 6-7 Traditional Automated Sales/Collection Process Flowchart-Cashier From mail room Checks 1 Remittance list Compare Performed by cashier Check From other Sources Enter data from checks Add new check data to file and prints output Cash receipts file 3 2 Deposit slip Cash receipts 1 Listing (journal) C/R File C

Traditional Automated Acquisition/Payment Process Flowchart-Receiving EXHIBIT 7-3 Traditional Automated Acquisition/Payment Process Flowchart-Receiving From Customer or salesperson Performed by sales order clerk Receiving reports Receipt transaction To accounts payable procedure To stores and accounts payable Update master file Error and exception display Open purchase order file Receiving reports file Packing slip Count and Inspect received items; compare to packing slip reconciliations Edit receipt data and prepare receiving report Enter receipt on CRT terminal Merchandise inventory master file Supplier history file

IBM’s NEDS (National Employee Disbursement Solution) EXHIBIT 7-7 IBM’s NEDS (National Employee Disbursement Solution) Employee travels Employee enters reimbursement request Supervisors reviews and electronically approves request Funds are electronically transferred to employee’s bank account Computer edits and audits reimbursements data as it is entered Impact : 393 headcount reduction $291 millions savings (10 years) Decreased processing time Increased controls Better management information New role for the accountant

EXHIBIT 7-8 EDI Data Flow CUSTOMER (PURCHASE CYCLE) order Vendor’s Invoice Receiving report Check of EFT Sales Customer Shipping documents Goods Internal data flows External data flows CUSTOMER (PURCHASE CYCLE) SELLER (REVENUE CYCLE)

Purchasing Disburse Payment Cash Bank EXHIBIT 7-9 Christopher, Inc. Acquisition/payment REAL Model (Without relationship semantics) Authorizing Agent Inventory clerk Purchasing Vendor Receiving Clerk Order request & Review goods from vendor Disburse Payment Cash Bank (1,1) (0,*) (1,1) (0,*) (1,*) (0,*) (1,1) Receive Goods (0,*) Warehouse Cashier (1,1) (0,*) (1,1) (0,*) (1,1) (1,*) (0,*) (1,*) (0,*) Account payable