Process Confirmation

Accounts Receivable
R-010 thru R-060
Project XYZ Initiative
April 22nd
th
2008
2
Team Presentation Contents
Key Count Summary
Process Summary and Objectives
Leading Practices and Key Features
Process Optimization Opportunities
As-Is and To-Be Significant Process Changes
Identified Gaps
Policy and Board Rule Impacts
Change Impacts
Controls Framework
As-Is and To-Be Major System Changes
Key Development Objects
Support Required from the Steering Committee
Implementation Challenges
3
Key Count Summary
Item Count
Processes: 6
Tasks: 44
Worksteps: 125
Roles: 9
Potential Development Objects
(excluding reports):
9
SMAs: 30
Review Sessions: 17
Validation Sessions: 1
4
Process Summary and Objectives
Summary R-010 Maintain Customer Data
This process deals with the approval and maintenance of customer master data elements
such as the customer account group, address information, reconciliation account,
correspondence types, dunning information, payment terms, etc. It involves managing
customer master data from a centralized perspective. This process ensures that all
potential Governmental and local entity billing and receivables data is identified and that
the data is accurate and complete
Objectives
Define the request and approval process for central maintenance of the customer master
data elements (i.e., customer account groups, address information, reconciliation
account, correspondence types, dunning information, payment terms, etc.)
Create additional transparency in the flow of information, thereby increasing control of
master data and mitigating risk
Maintain one single, central master data database for all customers throughout Client X.
All customer master data will be maintained within one department
Establish clear policies and procedures on the criteria for new Customer Master Data
request, set up and maintenance.
Define realistic turnaround time for the creation or maintenance of master records
Set up impact matrix to identify the related impact of master data changes and timely
notify the affected parties
5
Process Summary and Objectives
Summary R-020 Compute and Issue Invoices and Statements
The compute and Issue invoices/statements process deals with the creation of Accounts Receivable
entries within SAP. The process begins when a customer has been provided a good or service. The
various departments must record the charge and apply it against the customers account. An invoice may
be generated from SAP and mailed to the customer. The invoice number will match the accounting entry
against the customer account. There are several different types of billings: Grants, Facilities, Internal A/R
at Schools, etc. The following departments will create receivables in SAP:
9241 Facilities Operations-Maint.
9025 Food and Nutrition
9217 - Govtl Affairs & Land Use
9937 Schools Police Administrative Division
9129 General Accounting
9112 Risk Benefits Management
9321 Payroll (Release 2)
Schools (Summary Receivables)
Objectives
Provide a centralized view of Account Receivables and balances due
Define a standardized process of recording receivables
Define a standardized process of creating credit memos, adjusting invoices and reversing entries
Provide standardized billing correspondence
Provide robust report capabilities (customer forecasting, overdue balances, open line items, etc.)
6
Process Summary and Objectives
Summary R-020 Compute and Issue Invoices and Statements (schools)
The compute and Issue invoices/statements process from the schools perspective will
differ from the District in terms of detailed receivables. Schools will have the ability to
create summary receivables and record cash receipts in SAP.

Objectives
Provide a centralized view of Account Receivables and balances due at the school
level
Define a standardized process of recording summary receivables at schools
Provide various Summary A/R reporting capabilities
7
Process Summary and Objectives
Summary R-030 Process Receipts
This process involves the receipt of payment for products and services provided. This
includes the deposit of those receipts, application and recording of cash receipts and
updating of financial records. Receipts can be received in many formats, both
manually and electronically. The objective of the process is to receive and deposit
these amounts in the shortest possible time with the lowest processing cost. The
receipting process for Client X will be centralized as the Treasury department will be
responsible for receipting all payments. However, it should be noted that the AR
department will clear all receivables (Contracted Programs personnel will clear all
grant related receivables, General Accounting personnel will clear all other remaining
receivables. Some ACH, EFTs will come through Treasury directly via the ICMS-SAP
interface, no application of cash will be required. The interface will post the cash to
the correct accounts in SAP
Schools will continue to receipt their own incoming payments and will leverage SAPs
cash journal for this purpose

Objectives
AR department within General Accounting will clear all district receivables
Standardize the business process, improve the timeliness of the application of cash
Provide real-time-cash management reports and provide accurate cash forecasting
Improve the reconciliation process
8
Process Summary and Objectives
Summary R-040 Manage Accounts Receivable
This process involves administering policies and procedures for:
- Receivables management
- Tracking and reporting receivables data
- Gathering and analyzing data

Process allows for the identification of performance changes of particular accounts or account
aggregates and adjusting the operational behavior of the organization (through policies and
procedures). Therefore addressing changes in an effective and timely manner.

Objectives
Standardize the collections process and provide tools and correspondence to help expedite
the process, i.e. dunning program and dunning letters
Provide a centralized view of the customer account and open items
Create a Central Unit within General Accounting (AR) which will oversee all collection
operations
9
Process Summary and Objectives
Summary R-050 Compute and Issue Refunds or Credits
This process computes account balances, identifies refund/credit customers and invoices, and
recalculates refund/credit balances for specific accounts. This process includes consolidating
refunds, generating and sending relevant correspondences and credits/refunds, and
processing customer complaints and inquiries. All credit memos will be automatically blocked
and must be approved by the AR Supervisor prior to posting. Credit memos will either be
applied against outstanding receivables or a check will be cut and mailed to the customer

Objectives
Standardize the credit memo process and maintain policies and procedures in respect to
issuing credits
Automate the approval process to ensure that all credits are approved by the AR Supervisor
prior to being applied against an outstanding debt or paid to customer
Provide real-time data to assist in the determination of whether a credit should exist on the
customer account
10
Process Summary and Objectives
Summary R-060 Provide Customer Assistance
This process is an essential component for an efficient, customer-driven organization. This
process includes serving as the initial point of contact for customers, and other account holders
who have questions regarding their account. It involves referring complex issues to business
experts, resolving appeals/disputes, and providing Account Statements and additional copies of
invoices etc

Objectives
Provide real-time data to assist with various customer queries regarding their account
Provide ability to generate Account Statements for customers and reprint customer invoices
upon request
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Roles within Accounts Receivable
Role Role Description
Customer Master Data
Administrator
Involves the creation and maintenance of all customer master data. Access to
the customer master data transaction (create and maintain) are limited to this
role
AR Clerk Set up and maintenance of all receivables within a specific department,
managing all correspondence and managing collection activities and
reconciliation of customer accounts
AR Supervisor Management of all the activities performed by the AR clerk. This roles involves
the approval of invoices, credit memos, adjustments etc and overseeing the
collections process
Treasurer Management of liquidity risk management, cash management, issuing debt,
and capital structure
Cash Application Clerk Application of cash and clearing of receivables within the AR department
(General Accounting)
District AR Manager Oversees cash applications and collections from a District perspective.
Removes payment block on credit memos and approves/rejects write offs
School Cashier Receipting and posting of all incoming payments into the school sites
Internal Funds Clerk Involves the administration of cash management at school sites and creating of
summary receivables
Principal Administration and management of all school operations
12
Leading Practices and Key Features
Manage and maintain one consolidated customer master database to ensure
accuracy, proper maintenance and security procedures - therefore reducing data
redundancy

Automate the approval process for master data maintenance and complete a master
data change request in a timely, structured, and controlled manner

Provide an audit trail report to capture all financial entries against a customers
account, including reversals, credits, payment history, etc.

Leverage integrated information systems that allow different departments to share
data.

Standardize AR processes, such as billing, issuing invoices, applying credits and
collections, etc.


13
Leading Practices and Key Features
Automate the process of dunning/collections across the District

Leverage real-time customer balances and conduct various types of analysis and
generate required reports

AR processes are tightly integrated with all SAP modules and provides real-time
updates to receivables balances

Establish and enforce a comprehensive policy for recording and management of
receivables and collections, which will increase timeliness and accuracy of AR
information

Standardize and centralize the receipting process with Treasury posting payments to
cash clearing accounts and the AR department applying cash and clearing receivables
and posting cash receipts to respective revenue account



14
Process Optimization Opportunities
Current and Proposed Service Delivery Model
No central master database for the management of customer master data. Customer
master data is stored and managed in offline files (i.e., excel spreadsheets).
Opportunities exist to realize increased control, consistency and efficiencies by
creating a department within General Accounting to create and maintain all customer
master data.
AR processing occurs in multiple departments via different models and processes
Multiple different systems and tools are used to record receivables, such as
QuickBooks, Peachtree, Excel spreadsheets, etc.
Opportunities exist to realize increased control, consistency and efficiencies by
standardizing the AR process and providing a model for all Departments to follow
when managing receivables


Process Optimization - Increased efficiency and control resulting from:
Defining and centrally maintaining approval/change process
Requiring customer master data request forms to be emailed to the customer master
data unit mailbox.
Assigning one group will mitigate the risk of duplications
Define and standardize Accounts Receivable process
Provide a consolidated view of the customer and outstanding balances across the
District
Define and configure AR reports to assist with the management of receivables and
forecasting
Standardize the correspondence associated with billing, dunning and receipts, etc.
Automate approval process for billing, credit memos and write-offs
Centralize receipting process with Treasury posting all payments to cash clearing and
AR applying and clearing receivables

15
Process Optimization Opportunities (contd)

Other efficiencies:
Retain all completed requests for auditing purposes, ensuring statutory and management
reporting requirements
Enforce policies which will help ensure that a consistent naming format is used for master
data and that the master data elements are used for the correct purposes
Real-time integration between all SAP modules, with improved controls through system
checks and balances across all functions
Processes will be monitored to ensure that policies are closely followed and adhered to

16
As-Is and To-Be Significant Process Changes
Each location with Client X creates and
manages customer master data in
offline files (excel) and all have different
processes and retain data differently
Decentralized receipts. Payments are
received at various departments and
forwarded to Treasury. This is a slow
and in-efficient process
No consolidated view of outstanding
balances

No AR sub-ledger within MSAF - a cash
based











Consolidated customer master database,
standardized customer master data definitions,
and consistent policy for customer master data
creation and maintenance
Centralize the receipting process where Treasury
will post all incoming payments to cash clearing
accounts and the AR department will apply cash
and clear all receivables and post cash receipts
Consolidated AR processes and real-time
reporting information fully integrated with GL
Centralized view of customer balances and
receivables. Standardized AR processes and
management of receivables

As-Is
To-Be
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Identified GAPS
No identified GAPS for Accounts Receivable
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Policy Impacts
Establish policy and procedures for the following:

Provide guidelines and criteria for the creation, block and deletion of data
Customer master data request approval process, defining the roles of originators and
approvers, additional data updates and validation
AR processes, Invoice adjustments, reversals and credit memos receipting and
collections
Invoice approval process, defining the roles of originators and approvers
Dunning procedures and correspondence types
Adhere to current board rules in respect to write-offs

Define mission, goals, objectives of new Centralized Customer master Data unit and AR
department and establish master data management governance, policies and procedures



19
Change Impacts
Category
Centralized Customer Master will lead to consolidation of customer master data,
provide approval controls and changes in policy. This is a new process as maintenance
of customer data was maintained by the individual departments
Accounts Receivable is a new process for the District. The various departments will
now create an AR entry in SAP and generate an invoice and mail to the customer.
Revenue will be recognized at the time of invoice
Require new trained resources at the District to perform and manage the new AR tasks

Benefits of Change
Centralized maintenance process provides:
- Increased controls
- Increased transactional efficiency
- Reduction and duplication of customer master records

Consolidated view of the customer across all divisions
Real-time updates to receivable balances
Real-time, on-line, customizable reporting on AR transactions
Less reliance on paper based reporting and analysis




20
Change Impacts (contd)
Risks Associated with Change
Departments may experience a delay in the processing of customer master data
(implement policy to enforce a quick turnaround)
AR personnel must be hired and attend the training provided in order to understand
the Accounts Receivable module
Ensure personnel made a good faith effort to collect outstanding receivables as
auditors will question overdue receivables

Implementation Requirements
Assign a role which involves the creation and maintenance of customer master data,
management of the process on a daily basis
Assign a role which involves the processing of receivables within SAP
Impacted Audience
All departments within the District who require customer master data to be created
and the end users within the department who will be responsible for managing the
process
All departments within the District who process receivables within SAP

Level of Impact
High







21
Controls Framework
The centralized customer master data group reviews and approves the customer master
data in accordance with established policies and procedures mitigating the risk of
inaccurate or duplicate master records
End Users within the various departments will complete the customer master data request
forms and submit to the customer master data administrator for approval
Controlled access for the following:
Creating and changing customer master data transactions are restricted to the
customer master data administrator roles
Attaching a customer master record to a Grant Sponsor will be restricted to
authorized Grant Management personnel
Processing AR invoices are restricted to authorized personnel
Reversing or adjusting an invoice is limited to specific individuals

SAP reporting capabilities provide audit trails including details of all customer master data
addition or changes
Workflow will be leveraged to ensure only authorized individuals may approve invoices






22
Controls Framework (contd)
Segregation of duties is observed between the Maintain Customer Master data function
and the process customer invoice function. These processes will be managed in separate
departments

Segregation of duties is maintained by separating the creation of receivables and
receipting payments functions. The receipting process will be centralized with the
Treasury department where incoming payments are posted to cash clearing. The AR
department will apply cash to customer account and clear receivables

Bank reconciliations are performed between the bank statements and SAP bank
transaction activity. Differences are investigated and resolved on a timely basis

An approval process via workflow will be utilized prior to posting for:
- Bad debt / write offs
- Adjustments to customer accounts
- Credit memos / refunds

System functionality prevents invoices from being reversed if already paid

Procedures for analyzing, investigating and resolving balances outstanding over a pre-
defined number of days
23
As-Is and To-Be Significant System Changes
AR process
Offline disparate systems

AR Process
Consolidated integrated across all modules
enabled with workflow
As-Is
To-Be
24
Key Potential Development Objects
Name Description Implementation
Requirements
Workflow (AR
Entry/AR Invoice
creation)
Within the General Accounting department, all billings must be
approved and signed prior to being mailed to customer. This
workflow will transfer the AR financial data to the AR Supervisor
for approval.
Identify appropriate
approvers and back
up for approvers
Workflow (Write
Offs)
This workflow scenario involves the AR clerk creating and parking
a journal entry via T-code FV50. The journal entry will be sent to
the AR Supervisor for approval. The final step involves the District
AR manager receiving the workflow notification for approval. The
document will be posted in the system once the District AR
Manager approves (only amounts greater than $500 are work-
flowed to District AR Manager)
Identify appropriate
approvers and back
up for approvers
Workflow (Credit
Memos)
This scenario involves an AR clerk creating and parking a credit
memo via T-code FV75. In order for the credit memo to be posted,
the AR Supervisor will need to approve the credit memo. In order
for the credit memo to be paid the District AR Manager will remove
the payment block
Identify appropriate
approvers and back
up for approvers
25
Key Potential Development Objects (contd)
Name Description Implementation
Requirements
Generic Invoice Generic invoice is required for Client X. This form will be created
and will have several different standard text options applied
dependent upon the condition/department, etc.
Need to analyze the
various verbiage
that is required by
each department
Generic Cash
Receipt
Generic receipt form is required for Client X. This form will be
created and will have several different standard text options
applied dependent upon the condition/department, etc.

Need to analyze the
various verbiage
that is required by
each department
Account Statement An Account Statement will be produced for Client X. This Account
Statement may be used for all customers and may be generated
periodically, i.e. monthly, quarterly, annually, etc.
Need to analyze the
various verbiage
that is required by
each department
Dunning Letter Generic dunning letter is required for Client X. This form will be
created and will have several different standard text options
applied dependent upon the condition/department, etc.

Need to analyze the
various verbiage
that is required by
each department
26
Proposed Customer Account Groups
The following Customer Account Groups will be created for Client X

Account
Type
Description Example Customers Est #
GNRL
General customers of District, not
related to Grants
Facilities, Risk Mgmt, General
Accounting, Govt Affairs & Land use,
Food & Nutrition etc
400
GOVT
Governmental Bodies associated
with Grants
Location Y Dept of Education, State of
Location Y
50
Group X
Internal Departments and
Schools within Client X
Each location code within Client X
500
EMPL
Employees of Client X Terminated employees (Implemented
with SAP HR/Payroll)
N/A
GRNT
Grant sponsor or grantor Customer account group covers all
grantors
100
1TME
One time customers, customers
who return business is unlikely
Record donations to District
1
27
Support Required from Steering Committee
Enforcing the policy on completing a customer request form and submitting to the
Central Customer Master Data Unit
Support the policy of credit memo approvals and write-off approvals
Support General Accounting Department in developing dunning policies and
procedures. The General Accounting Department will act as a oversight
committee to ensure collections policies are adhered to
Assist in gaining District-wide acceptance for a standardized AR process, including
billing, invoicing, receipts, collections and dunning
Support of the policy for new approval processes

28
Implementation Challenges
Change impact upon various departments within the District in terms of requesting
customer master data to be set up within SAP
Ensure personnel are hired for the AR department and are assigned to Customer
Master Data creation and maintenance transactions
Impact upon various departments within the District in terms of receivables, as
receivables were never captured in MSAF. Departments will have to be
increasingly cognizant of outstanding receivables and ensure they make a good
faith effort to collect outstanding debt
Ensure that relevant personnel attend the training provided in SAP FI-AR functions
AR billing will be a decentralized process, whereas the individual Departments will
have control over the creation of receivables and collections. However, receipts
will be centralized. Treasury will post all incoming payments to cash clearing and
the AR department within General Accounting will apply the cash and clear
receivables