A deal means a buyer's accountant works through your books, on a date. Order-to-Cash gets you ready. Every invoice you send checked against what the customer agreed to pay, with the money you are not collecting shown in dollars.
What it checks
- Price against the agreement. Every unit price on an invoice you send is checked against the price the customer's agreement sets for that item on that date.
- Amendment applied. A signed change to the customer's agreement, an amendment, is applied from its start date on every line it covers.
- Notice reaches the order. A price notice you sent applies only to orders placed after it, where the customer's agreement says so.
- Fee has a basis. Every extra line you charge matches a fee the agreement allows, and every fee the agreement lets you charge is billed.
- Quantity against the order. The quantity on your invoice is checked against what the customer ordered or what you delivered.
- Arithmetic. Every line, subtotal, credit and total on an invoice you send is added up again, so the arithmetic is right.
- Prepayment chain. On a final invoice, the deposit and earlier invoices the agreement calls for are taken off, and the credits match them.
- Duplicate. An invoice that repeats another, by customer, number and amount or by its content, is flagged as a duplicate.
- Price drift. Your price for the same item to the same customer does not move between invoices without a document that moves it.
- Dispute window. You are shown how many days the agreement gives the customer to dispute your invoice, while that window is still open.
- Terminology mapping. When your invoice calls an item something different from the agreement, the match is proposed once, confirmed by you, and remembered.
- Credit note has a basis. Every credit note, which reduces what a customer owes, ties to a return, a dispute or an agreement term, for that amount.
- Discount authorised. Any price below the agreed price has a clause in the agreement or an approval you recorded.
- Payment against terms. An invoice past its payment terms is shown with the days overdue and the amount still owed.
A finding, in its own words
Invoice 2041 bills Acme $11.90 a seat. The order form Acme signed sets $12.50 from 1 July. That is $0.60 a seat under on 240 seats: $144.00 a month not collected since July, $432.00 so far.
Credit note CN-118 takes $1,250.00 off what Northwind owes. I cannot find a return, a dispute or an agreement term it ties to. If there is one, add it to the Data Room or tell me the reason and I will re-test.
What it may ask you
- If an agreement doesn't say, how many days do customers have to pay you? Unless you say otherwise: 30.
- Is there an amount of under-billing too small to bother you? For example, under $25. Unless you say otherwise: 0.
- What reasons can you give a customer a credit note for? For example: return, breakage, dispute. Unless you say otherwise: return, breakage, dispute, agreed rebate.
- Any discounts you give that aren't in the customer's agreement? Name the customer and the discount.
- Does a customer call an item something different from your agreement? Like 'sixer' for '6-pack case'.
What it draws on
- Invoiced prices match what the customer agreed. COSO Control Activities, principle 10; SOX: Order-to-cash: pricing accuracy.
- Accuracy of recorded amounts. COSO Information and Communication, principle 13; SOX: Accuracy of transaction processing.
- Amendments and price notices are applied from the right date. COSO Control Activities, principle 10; SOX: Contract change control.
- Authorisation of transactions and changes. COSO Control Activities, principle 10; SOX: Authorisation of transactions.
- Fees the agreement entitles us to are billed. COSO Control Activities, principle 10; SOX: Revenue completeness.
- Invoiced quantity matches what was ordered or received. COSO Control Activities, principle 10; SOX: Three-way match.
- Deposits and progress invoices reconcile to the final invoice. COSO Control Activities, principle 10; SOX: Prepayment and deposit accounting.
- No transaction is recorded or paid twice. COSO Control Activities, principle 10; SOX: Duplicate payment prevention.
- Prices do not move without a document. COSO Monitoring Activities, principle 16; SOX: Vendor pricing monitoring.
- Dispute deadlines are surfaced while open. COSO Information and Communication, principle 14; SOX: Contract compliance monitoring.
- Credit notes have a basis and an approver. COSO Control Activities, principle 10; SOX: Credit memo authorisation.
- Discounts below the agreed price are authorised. COSO Control Activities, principle 10; SOX: Pricing override controls.
- Receivables are complete, real and collected on terms. COSO Monitoring Activities, principle 16; SOX: Accounts receivable completeness and aging.
What it needs
- the agreement or price reference the customer accepted (an order form, a rate card, a price list)
- amendments and the price notices you sent, the documents that change a price after signing
- orders and delivery notes
- the invoices you sent
- credit notes, the notes that reduce what a customer owes
- Connections, optional and only after your first finding: QuickBooks or Xero, so every invoice you send is checked as you send it. Nothing to connect to start.