This sample report focuses on the credit evaluation and collections review process. Objectives are to obtain an understanding of the existing processes, assess the internal control environment, and identify opportunities for process improvements. The best practices section provides examples of opportunities where the credit and collections function could implement new processes and significantly improve controls and efficiencies.
Key issues identified during the review include:
The current process does not allow for a rigorous, standardized approach to the evaluation of credit prior to the shipment of product and execution of contracts.
A detailed credit policy has not been formally developed to include credit limits and other key components.
Procedures as well as performance metrics need to be developed and implemented for both the credit and collection processes.
Many procedures are manual in nature due to less than adequate systems support. As a result, very few automated controls exist. The manual controls appear to be effective.
Incentives for collectors should be reviewed and adjusted to ensure an appropriate level of visibility over all amounts to be collected. Performance measures should also be adjusted to evaluate effectiveness.
Based on the benchmark results, an opportunity exists to improve the understanding and tracking of the cost and efficiency components of the two departments.