The lack in credit control system can be seen when the marketing department continued to supply product to Cold Gold Sdn. Bhd even though Cold Gold Sdn. Bhd credit is gone beyond its limit. Besides, Ms Choy as a credit controller did not take proper action about this issue. The recommendations are Ms Choy as a credit controller should know her duties and responsibility. Company need to send Ms Choy for training.
The training we recommend for Ms Choy to attend is Credit Management and Debt Recovery course being organised by Mr. Tam Fook Cheong is a fellow member of the Charted Association of Certified Accountant (FCCA), Associate Member of the Chartered Institute of Management Accountant (ACMA) and a Chartered Accountant of the Malaysian Institute of Accountant (CA). The objective of the course is to establish effective credit policies to increase business profitability, to develop effective strategies and practice to reduce outstanding payments and at the same time provide excellent customer service.
Besides, we recommend the company to create a new credit control chart. The picture below shows the credit approval flowchart which the company can follow. [pic] Ms. Choy need to check the credit position of customer first before she give approval to other department to proceed with the order. The 2nd issue is lack in trade receivable management whereby the figures on statement of the accounts sent to customer did not tied up with the balances in the accounts and it will lead to loss of future customers and sales.
We recommend to always double check the account statement before send to customer to ensure the number tied up with the company record and reconcile the subsidiary accounts receivables with the general but the reconciliation should be done by another person to catch someone mistake and to detect irregularities. Besides, by having proper documentation to ensure effective documentation and the receipt should be pre-numbered consecutively, prepared at the time of the transaction and using a user friendly format.
The user friendly format, we recommend is TITAN II PRECAST MANAGEMENT SYSTEM, it The 3rd issue is process of cash collection is weak whereby the operating cash was systematically running low due to weakness in process of cash collection. Cash payment was not recorded maybe due to human error or fraud. Besides, Encik Munir had not disclosed the receipts of payment from customer. We recommend setting up internal audit outsourcing to testing, monitoring company’s policy and internal control especially in accounting receivable auditing.
It is to detect a variety of audit risks related to account receivables and the possibilities of fraud. Besides, company offers discount such as 10% from total debt for early payment to encourage debtor to pay their outstanding balance earlier. The last issue is there is no segregation of duties whereby Encik Selamat crossed his boundaries as a General Manager and he instructed the marketing department to supply product to Cold Gold Sdn. Bhd even though it had exceeded credit limit. We recommend Encik Selamat to send for training under the Malaysia Institute of Management.
The program organized by Malaysia Institute of Management called personal development (emotional intelligence @ work). This program will give a clear view on his roles and responsibilities as a General Manager who is productive, innovative and competitive. Encik Kassim was trusted to manage the finances of the company and also be part of EPM’s marketing strategy. In the future, Encik Kassim will face difficulties in focusing both finance and marketing. We advise Encik Kassim to just focus in managing account and finance not marketing.