RD.020 Current Business Baseline

AIM RD.020 CURRENT BUSINESS PROCESS – ACCOUNTS RECEIVABLES

The National Company for Glass Industries – Zoujaj

Oracle Applications Implementation Project – Release 12

Author: Padmaiah V Creation Date: December 1, 2009 Last Updated: June 3, 2018 Document Ref: Version 1.0 Revision: 1.0

Approvals:

Mr. Yousef Al Salman General Manager / Project Sponsor , Zoujaj

Mr. Hatem Al Fadli Group Finance Manager , Zoujaj

Mr. Zulfiqar Ali Najeeb Project Manager, Zoujaj

Mr. Sathyanarayana Sarma Project Manager, Sierra Atlantic

Document Control

Change Record

Date Author Version Change Reference

22-十二月-09 Padmaiah V Draft 1.0 No Previous Document 07-Dec-09 Sathyanarayana Sarma Draft 1.1 Version Control Change 09-Dec-09 Sathyanarayana Sarma Draft 1.2 Draft 1.1 12-Dec-09 Sathyanarayana Sarma Draft 1.3 Draft 1.2 13-Dec-09 Sathyanarayana Sarma 1.0 Version Control Change

Reviewers

Name Position

Mr. Balan Asst Group Finance Manager – Zoujaj Mr. Padmaiah Consultant, Sierra Atlantic Mr. Chandrasekhar Bhavaraju Oracle CoE, Sierra Atlantic

Distribution

Copy No. Name Location

1 Library Master Project Library 2 Zoujaj Project Manager Riyadh, Saudi Arabia

Note To Holders:

If you receive an electronic copy of this document and print it out, please write your name on the equivalent of the cover page, for document control purposes.

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File Ref: RD20_AR_ZOUJAJ_1.0.doc Page ii of 41

Contents

Document Control...... ii

Process Listing and Process Descriptions...... 4

Descriptive Overview for Account Receivable...... 6

Process Descriptions for Account Receivable...... 9

Process Relationships for Accounts Receivables...... 25

Current Business Process Documentation...... 29 Critical Requirements...... 29 Current Benchmark Activities...... 29 Current Bottlenecks...... 29 Open and Closed Issues for this Deliverable...... 30 Open Issues...... 30 Closed Issues...... 30 Appendix 1 – Account Receivable Questionnaire...... 31

File Ref: RD20_AR_ZOUJAJ_1.0.doc Page iii of 41

Process Listing and Process Descriptions Zoujaj Receivables Department under the Finance Department handles activities related to trade

Receivables, such as Receipt Accounting, Receivables Reconciliation, and Receivable Reporting.

Proforma Invoices and Invoices for Sales are processed by the Sales Department. The Receivable

Function is to a certain extent computerized, and has three persons to handle the Accounts Receivable

functions. The Receivable accounting is on accrual basis, but for the direct receipts it is accounted on

cash basis since these are for the current period.

Sales Order Booking, Planning, Deliveries, Invoicing and related accounting activities are done at the

“Divisional Level” even though Sales and Marketing Department is “centralized” at Zoujaj Corporate

Office at Riyadh. Production is planned on a weekly basis based on the Sales Plan (in turn based on

Customer Calls). Customers place a Yearly Sales Order with tentative monthly requirements and

update it with Weekly Calls.

The Billing and Receivables are maintained in the IFS Receivables System. The IFS Sales Order system

records all relevant entries pertaining to Revenues on customer basis and is posted to the IFS

Receivables System. The IFS Receivables system generates Customer Aging Analysis, Customer

Ledger Open Items etc.

The following are the major activities of the Sales and Accounts Receivable Department’s at Zoujaj:

1. Sales Invoice Processing: The invoices for Sales Transactions are generated and maintained in the

IFS system by the Sales Department. The Orders are booked by the Sales Department, and once the

Marketing Manager approves the Sales data for the month, the invoices for monthly dispatches are

generated / created and dispatched to the Customers. At Zoujaj, it is possible that the Customer

many not be available in the IFS system during Order dispatch. During Order Booking, if the

customer insists for a “Proforma Invoice” a “Proforma Invoice “is generated by the Sales

Department and sent to the Customer. Invoices are generated by the Sales Department, once the

Invoices are verified by the Finance Department and approved by the General Manager

On receipt of the “approved” Sales Data from the Marketing Manager, the Marketing Department

creates the “New Customer” in the IFS System before the Final Sales Invoice can be generated.

Zoujaj Finance Department reviews the Sales Invoice created by the Marketing Department and

generates the Accounting for the same. For Foreign Currency Sales, Invoices are generated in the

Order currency, using the standard exchange rate (1US$ = 3.75 SAR) for conversion to SAR.

File Ref: Zoujaj_RD020_AR_Draft 1.3 Zoujaj / Sierra Confidential 4

2. Receipt Processing: Receipts from the Customer is processed as and when received. All Customer

Receipts are subject to the terms of the Order. Zoujaj Finance department also follows up with

Customers for Collections. Customers also remit the funds directly to the Zoujaj Bank Account as

per the terms of the Sales Order. Upon Receipt of the Check / payment from the Customer, the

same is entered in the IFS system and applied to the respective transaction(s). For Foreign

Currency Receipts against Export Sales, the same is entered in the IFS system as per the Bank

Statement.

3. Reconciliation : Reconciliation involves the following activities:

a. Reconciliation of Customer Balances with respective invoices.

b. Accounting and Reconciliation of Customer Receipts

c. Reconciling the IFS Receivables Ledger balances with the IFS General Ledger

Descriptive Overview for Account Receivable

The following is an Overview of the Account Receivable functions at Zoujaj:

 Organisation Structure

o Organisation Structure of the Finance Department

 Master Files

o Customers - General , Export & Domestic

o Sales Person

 Set up

o Payment Terms

o Document Sequencing

 Sales Revenue (Invoicing)

o Revenue Recognition

o Revenue Recognition on the Cutoff Date

 Trade Debtors

o Trade Debtors

 Transactions

o Invoices

o Debit Memo’s

o Credit Memo’s

o Adjustments

 Trade Discounts and Freight Charges

o Trade Discounts (Price and Volume Discounts)

o Trade Samples

o Freight Charges

 Sales Return

o Export Sales Return

o Domestic Sales Return

 Provision for Doubtful Debts

 Collections

 Receipts

o Receipts

o Deposits

 Prepayments

o Customer Advances

o Customer Deposits

 Refunds

o Customer Refunds

 Non Trade Receivables

o Loans Given to Employees

o Insurance Claims

o Miscellaneous Debtors

o Sale of By-Products

o Sale of Scrap

o Sale of Assets

o Sale of Services

 Closing of Account Receivables

o Accounts Receivable Closing

o AR Reconciliation

. Quantities

. C&F Sales Invoices

. Sales Credit Terms

. Cutoff Date Reconciliation File Ref: Zoujaj_RD020_AR_Draft 1.3 Zoujaj / Sierra Confidential 7

. Freight

o Updating AR Information in the IFS General Ledger

 Reporting

Process Descriptions for Account Receivable

Process Id Event Process Title Description of Process Output

AR.RD.1.0 Organisation Define The Finance & Accounts department at Zoujaj is

structure Organization centralized at the “Corporate Office” in Riyadh and is

Chart responsible for all Financial Activities of the

Organisation. The Corporate office at Riyadh is the

main administrative office. Zoujaj has Manufacturing

Units / Divisions at Riyadh and Dammam.

The General Accounting, Budgeting, Banking &

Treasury Operations, are all handled by the Zoujaj

Finance Department at Riyadh. The Finance

Department is responsible for :

1. “ Centralised” Payables and Receivable

transactions processing and accounting,

Payment and Receipt Processing, General

Ledger transaction processing.

2. Accounting of Raw Material, Consumables,

other warehouse inventory and Finished

Goods.

3. Recording and Capitalization of Fixed Asset

procurement and Capital Expenditures

4. Cash Management & Bank Reconciliation and

liaison with banks.

5. Generating Monthly Financial statements,

accounts and Reporting

6. Preparation of the “Annual Budget”, and the

administration of budgetary controls.

The Sales Department is responsible for generation and

maintenance of the Sales Invoices.

AR.RD.2.0 Master Files Customer Customers are created in the IFS system during invoice Customer Definition defined in entry when the customer is not found in the system. the IFS The following details are recorded while creating the System

Customer in the IFS System:

1. Grouping: Customers are grouped based on

region. The customers grouping based on regions

are identified based on the customer number. The

Customer Number is manually assigned by the

user where a set of sequence number are allotted

to specific region. For example:

i. All Customers in Saudi Arabia - will have a

number starting with 800.

ii. All Customers in GCC will have a number

starting with 300 etc.

Customer Receivable balances are grouped

“Region-Wise” like Saudi Arabia, GCC, European

countries, African countries, Other Arab countries

etc. while posting to IFS General Ledger

2. Credit Control : No credit control is currently

being used in the IFS System, however Zoujaj

Finance Department monitors the “weekly

outstanding” of the Customer for Credit Control

3. Payment Terms: The customer will be created in

IFS system with payment terms like 30 Days

credit, 60 days credit, 90 Days etc.

4. Customer Definition: The following details are

recorded while creating a customer in the IFS

system:

 Customer Number: Manually assigned

 Name: Customer Name

 Address: Customer address

 Title: Title code

 Country: Country code

 Currency: Currency code for the customer

 Postal Address: Customer Billing Delivery

Address: Customer Shipping address

 Purchasing/Accounting Reference: Contact

person name.

 Telephone: Telephone number of customer.

 Telefax: Fax number of customer.

 Telex Number: Telex number of customer.

 Email Address: Customer email address.

 Language: Language code for the customer. AR.RD.2.1 Customer Customers – There are a total of 20 customers in the Export category. Export AR.RD.2.2 Customer Customers – There are about of 25 Customers in the domestic Domestic category. AR.RD.3.0 Master Files Sales Person All customers created in IFS system are assigned to one Definition default Salesperson. Zoujaj currently has “only" 1

Salesperson. Currently, there is no system of Payment

of Sales commission to the Sales Person.

AR.RD.4.0 Setup Payment  Export Sales: Export Sales have the following Terms credit terms:

o 100 % Advance Payment

o Partial Advance as per the terms of Sales

order ( with LC or without LC)

o Non LC Terms - 30 Days Credit from the

date of Invoice for SELECT customers

o LC Terms – At Site, 30 Days, 60 Days, 90

Days as the case may be.

 Domestic Sales: Domestic sales have the following

Payment Terms:

o 100% advance payment received through

o Partial Payment

o 30 Days Credit

o 60 Days Credit

o 90 Days Credit

o Letter of Credit at Site and with Credit

 The General Manager is the approving authority

for any new credit term. AR.RD 5.0 Setup Document  Transaction numbering is a “Manual” process in Sequencing the IFS Receivable system. Every transaction is

assigned a “Unique Number” during transaction

entry and processing. The IFS Receivables system

does not provide for the “Number Validation”

during the transaction entry.

AR.RD.6.0 Sales Revenue Revenue  A sale in ZOUJAJ is treated to be complete and will Recognition be accounted for once the goods are dispatched

from the Zoujaj Factory Premises.

 The transfer of goods takes place at the time when

the goods are physically delivered to and accepted

by the customer or on the date of dispatch to the

customer on a FOB/C&F basis as evidenced by the

dispatch document.

 In ZOUJAJ usually the revenues from the sale of

goods is recognized, if the delivery of the product

has taken place at the “Factory Site” evidenced by a

Delivery Note for both Domestic Sales and Export

Sales. AR.RD.6.1 Sales Revenue Revenue In the event that the delivery of the goods commences Recognition on the last working day of a month before 12.00 on the Cutoff Date midnight and continues to the following day which is

the first day of the subsequent month, then the sales

revenue shall be recognized as follows :

 Dispatches / Delivery / Loading: Based on the

cumulative quantity of the products loaded up to

7.00 A.M of the next day (immediately following

the last day of the month), after 1 hour of the last

shift of the 3 shift operation elapses, this is

recognized as the revenue of the previous month.

AR.RD.7.0 Trade Debtors Trade Debtors  The month-end sales invoices received for the

loadings made until 7 A.M of the next day

(immediately following the last day of the month),

after 1 hour of the last shift of the 3 shift operation

elapses, is updated on the IFS Accounts Receivable

ledger as Receivables for the previous month.

 Any Charges for freight are recognized as liabilities

and are updated in the IFS Sub ledger based on the

Transporter’s Rate Contract on a Trip - Destination

basis as “Accrued Transportation charges”. AR.RD.8.0 Trade Trade At Zoujaj, Sales Department is responsible to maintain Discounts Discounts the list of customers eligible for trade discounts and to

obtain the General Manager’s approval for any

additions or deletions to the list. Any revisions in this

list is advised to the Finance & Accounts department

through an Inter-Office memo

 Discounts, if any, offered to Customers is treated

as follows: Discounts are offered to only “select”

customers, which have to be approved by the

General Manager, in which case the discount is

reflected by a downward revision in the CFR / FOB

prices. Price Discounts are shown as negative

values in the Invoices and Discount values debited

to Sales Discount account.

 Gross CFR Sales after discount is the Net of Price

and volume discounts.

 In case of Volume discounts, “Discount

Quantities” are shown as “negative values” in the

Invoice with “Nil” value. The “Cost of Quantities”

delivered as part of Volume discount is debited to

“Cost of Goods Sold” Account.

AR.RD.8.1 Trade Freight  Trade Debtor accounts are recorded on their C&F Discounts Charges invoice value. Associated Transportation &

Carrying charges are credited as a Liability under

“Accrued Transportation”. AR.RD.8.2 Trade Samples for  Bottles are given as samples to customers for “Test Discounts Test Filling , Run” on their Filling / Production lines. In such etc cases, Invoices are raised on customers with “Zero

Value”. Cost of Bottles given as samples will be

reduced from Inventory and charged to Sales &

Marketing Expenses as “Sales Promotion”

Expenses. AR.RD.9.0 Sales Return Export Sales  Currently there is no business scenario where Return Export Sales are returned as it is a very expensive

business transaction. AR.RD.9.1 Sales Return Domestic  If a Saudi based customer rejects the consignment Sales Return then the material is transported back to ZOUJAJ

and is accepted as Inventory valued at the ruling

product prices.

 The inventory ledger is debited after the

Warehouse accepts the “Goods Return

Consignment”, and advises the Finance

department.

 The earlier entries for the recording of revenues are

reversed and the cost of transporting the goods

from the customer site to ZOUJAJ Factory Site is

charged as Freight Expenses under Sales &

Marketing department.

AR.RD.10.0 Provision for Create  Customer balances are reviewed on a Weekly basis Doubtful Provision for and a decision is taken to write off non recoverable Debts Doubtful Debts balances, if any.

 Provision : If a doubtful debt / account is identified

at the end of the accounting year, the Manager -

Finance and the Manager- Sales jointly decide upon

the future course for the recovery of dues, and if

needed recommend to the General Manager /

Board for adequate provisions in the Balance Sheet

for the doubtful debtors. The Provision for

Doubtful Debts is created once approved by the

“Board of Directors”.

 In case the Debts “written off” are recovered at a

future date, it is treated as “Miscellaneous Income”.

AR.RD.11.0 Transactions Invoices The following is the process for Invoicing for Domestic

Sales and Export Sales:

1. Domestic Sales:

 Sales Department books an annual order from the

customer.

 The order is entered and maintained in excel with

month-wise shipping schedule.

 Month-wise order will be entered in IFS system

before shipping the goods to the customer.

 If Customer requests for an Invoice, a Manual

Invoice is printed in Pre-Printed Stationery in

Quadruplicate and “Original” is sent along with

the Shipment to the Customer by the Sales

Department.

 Customer-wise Monthly Consolidated Invoices are

generated from the IFS system and sent to the

Customer by Physical Delivery or Courier, at the

end of the Month for all the sales for that month.

2. Export Sales:

 In case of Export Sales, the Certificate of Origin

form (pre-printed form) will be dully filled

(manually) and send along with the invoice

during shipping.

 The Invoice date and the Negotiation date could be

different and is dependent on the time taken for

the clearance from the government.

 All Invoicing is in US Dollars (US$) and the

standard conversion rate is 1US$ = SAR 3.75.

AR.RD.11.1 Transactions Debit Memo’s ZOUJAJ prepares Debit Memo’s for Price Variance(s)

i.e. for Price Differences, where prices have been

revised in between the month and the shipments were

executed at the old price. The Debit Memo is raised for

the upward differential price and sent to the

Customers.

The Debit memo is raised in MS Word / Excel by the

Sales Department and sent to Finance Department for

concurrence after approval by the General Manager. AR.RD.11.2 Transactions Credit ZOUJAJ also issues Credit Memo’s. It issues Credit Memo’s Memo’s when Goods are returned by the Customer,

damages, downward Price Revisions/ variations etc.

Also customer incidental claims for any damages due

to defective goods delivered by Zoujaj are also

refunded to the Customer. The Sales Reference number

generally appears in the Credit Memo. The credit

memo is raised in MS Word / Excel by the Sales

Department and sent to Finance Department for

concurrence. Finance Department will obtain the

General Manger’s approval before approving the credit

memo. On receipt of the approval from Finance, Sales

Department will issue the Credit Memo to the

Customer.

AR.RD.12.0 Collections Collections The following is the collections review process at

Zoujaj:

 Finance department follows up with customers for

collection.

 A Monthly Statement is sent to the customer,

which has the details of Invoice No, Date, Amount,

Partial Payments, if any, Payment Due Date, and

Delays, if any.

 Aging report will be generated from spread sheet.

 Customers Calls are also made regularly by

Finance Department.

 Receivable Collections Status is discussed in the

Weekly Management Meetings.

AR.RD.13.0 Receipts Customer Customer Receipts are recorded and accounted as Receipts when the receipt is realised in the bank based on the

conformation from the bank. The following is the

process for Receipt Processing and accounting in the

IFS System :

 Customers directly remit the funds to the Zoujaj

Bank Account. For Direct Remittance, a receipt is

created in IFS system based on the confirmation

from either “Bank” or from the “Customer”.

 Customer will send a “check” to the Riyadh office

and the same is recorded in IFS system, and

deposited into the bank for collection. Customer

Account is “credited” when the check is “received

and recorded” in the IFS system. In case of “non

realisation” of cheque by the bank, the receipt

entry is reversed, and customer account debited in

the IFS Receivables system.

 Zoujaj do not issue any physical receipt to the

Customer when the customer payment is received.

 A Statement is sent to the customer at end of the

month. This statement details the Receivable

Outstanding and Overdue for Payment as of that

 Cross Currency Receipts are also recorded in the

IFS Receivable system. Example, where invoice is

in US $ currency and receipt is in SAR currency or

vice-versa. The IFS system will calculate exchange

gain/loss automatically. AR.RD.13.1 Receipts Customer Zoujaj collects deposits from customer based on the Deposits / negotiated terms. These deposits are recorded as a Advances advanced payment in IFS Receivable system, and the

same is offset against last invoice of the customer.

AR.RD.14.0 Prepayments Customer The accounting procedures delineated below relate to Advances the accounting treatment for customer advances

received by ZOUJAJ before the delivery of the goods.

 The company makes the deliveries, after receiving

the advance payment from all small petty

customers or as per the terms of the Sales Order.

However majority of the customers have a long

standing relationship with Zoujaj and enjoy an

average 30 Days Credit Period from the end of the

month in which the Invoice is made.

 Only the customers with whom the company has a

long association are exempted from advance

payments and are offered favourable payment

terms including credit period.

 The General Manager approves the list of such

customers eligible for receiving favourable

payment terms. AR.RD.15.0 Refunds Customer Zoujaj rarely refunds any amounts to its customers. Refunds However, if a refund is deemed necessary, an approval

is obtained from the General Manager. Once the

approval is received, the Finance Department prepares

a credit note against the customer in IFS Receivable

System, and a manual cheque is processed and

remitted to the Customer to offset the outstanding

credit “OR” Credit notes are adjusted by the Customers

against future invoice payments. AR.RD.16.0 Non Trade Loans to As per HR Policy / Service regulations, ZOUJAJ Receivables Employees provides loans and advances to its employee’s

contingent on their compliance with certain service

conditions. The loans and advances are recovered from

the employees from their monthly payroll (on an

instalment basis) / end of service benefits and are

accounted directly in the IFS General Ledger. File Ref: Zoujaj_RD020_AR_Draft 1.3 Zoujaj / Sierra Confidential 21

AR.RD.17.0 Non Trade Marine Marine Insurance Claims for Purchases: Receivables Insurance  Marine Insurance in respect of foreign purchases is Claims administered through a long-term agreement with

a Saudi based insurance company.

 The claims arise when the Warehouse and User

departments inspect goods received and identify

discrepancies due to short deliveries and damage

in transit.

 The claim report is forwarded to the purchase

department who negotiate with the insurance

company for the claims.

 On agreement of the claims the insurance

companies will issue a Credit note to ZOUJAJ for

the recording of the Marine Insurance claim.

 All Insurance claims are recognised only on

“Settlement and Receipt of Claim in Cash” . The

claims are credited to the IFS Accounts payable

Supplier’s Ledger (Account) to wipe off the Debit

balances and the Bank Account is debited.

 If the replacement consignment is received a fresh

GRN is received and accounted accordingly.

Marine Insurance Claims for Loss in case of Export

Sales:

 Zoujaj has a running / open Marine Policy with

Insurance Companies.

 A monthly declaration is sent to the Insurance

Company for all the Export Sales.

 For any claims received from the Insurance

Company, the Zoujaj Bank Account is debited and

the Customer Receivable Account is credited, to

close the corresponding Customer Debit Balances.

The Exchange Rate variance, if any, is treated as a

File Ref: Zoujaj_RD020_AR_Draft 1.3 Miscellaneous Expense. Zoujaj . / Sierra Confidential 22

AR.RD.17.1 Non Trade Insurance ZOUJAJ enters into long-term agreements with Receivables Claims - insurance companies for the insurance These Others agreements are all on a “Year to Year” Basis and

renewable on an annual basis.

 The Insurance Company negotiates an insurance

premium with the Company for the Insurance of

the Company’s properties. This premium is paid at

the beginning of an accounting year and is

recorded as a pre-payment.

 Each month a part of the insurance premium is

allocated to various departments based on the

value of assets held by the respective the

department

Insurance Claims against Loss of Asset (s)

 The insurance companies assess the damage to the

Asset / property and settle the claim.

 The claim settlement value will be adjusted against

the Lost Asset. Any difference after adjustment of

the premium to the balance asset cost will be

treated as a Misc Expense or a Misc Income. AR.RD.17.2 Non Trade Sale of By-  Any product that is process wastage (measurable Receivables Products or non-measurable) when sold will be treated as

non-trade receivable / Misc Income. AR.RD.17.3 Non Trade Sale of Scrap  Off Quality products, Worn-Out Moulds, Enamel Receivables Cans, Bags, etc when scraped and sold in

accordance with company policy/ procedure will

be treated as Non-Trade Receivables / Misc Income. AR.RD.17.4 Non Trade Sale of Assets  Revenue from sale of disposed fixed assets - Pls Receivables refer to RD 20 Fixed Assets - FA RD 4.9

AR.RD.17.5 Non Trade Sale of Professional Services rendered by Zoujaj to third Receivables Services parties are invoiced on a “Man-Day” basis as per the

terms of the Professional Services Agreement. Invoices

are raised as per the terms of the engagement and

revenue recognized accordingly. AR.RD.18.0 Period Close Closing of Goods sold or services rendered and invoiced will be Process Accounts taken into AR as Receivable on their invoice dates and

corresponding receipt of money will be adjusted

against such receivables. All such transactions for a

period will be summed into AR balances bifurcated on

the basis of Customer with their Aging reports. Related

charges, if any, like freight etc will be transferred as

Accrued Transportation to the IFS General ledger. AR.RD.18.1 AR Quantities The quantity of items as per the sale invoice should Reconciliation agree with the quantity delivered from the Factory. AR.RD.18.2 AR CFR Sales In case of CFR sales invoices, the liability for the Reconciliation invoices payment of freight costs should be agreed/reconciled

with the approved destination-wise freight rates

provided by the Despatch Section in Sales department AR.RD.18.3 AR Sales Credit The sales credit terms as agreed with the Customers are Reconciliation Terms reconciled with the credit terms as approved by the

General Manager AR.RD.18.4 AR Cut-off Date The month-end sales invoices received for the loadings Reconciliation Reconciliation made until 7.00 A.M of the next day immediately

preceding the last working day of the month is updated

on the IFS Accounts Receivable Ledger. AR.RD.18.5 AR Freight Charges for freight are recognized as liabilities and are Reconciliation updated in the IFS General ledger as Accrued

Transportation. AR.RD.19.0 Updating AR Transfer to The updation to the IFS General Ledger for all Information in General Receivable Activity is through a Posting process that is the General Ledger Ledger Manual. Journal Vouchers are generated on an

Individual Invoice Basis, which gets transferred to

General Ledger during the Posting Process.

AR.RD.20.0 Reporting Reporting The following reports are prepared by the Receivables

Department both for the purpose of monitoring as well

as for Management reporting purposes:

 Aging Report

 Customer Ledger Open Items

Process Relationships for Accounts Receivables

1. Finance Department – Workflow for Accounts Receivables (As Is)

National Factory for Glass Bottles – Receivable ( AS IS)

Invoice & Receipt t Monthly Sales

n Accounting. Transfer to IFS

e Data from Sales Generation of Report General Ledger m Department t

r Month End process. a p e D

e c n a

n Verify Invoices i Follow up and F and send back Collect Customer End to Sales Receipts Department

Compile Monthly Sales Track the Monthly Update the sales Data Customer- wise Final Order Dispatch data in Xls based for Marketing Manager Create Invoice Customer in Xls on Dispatch (MM) Approval and and send to Invoice Invoicing Customer (after

t GM approval)

n through Finance e If customer requests m t

r Invoice for each

a shipment - Create p Sales Data for

e Record Order Marketing Manager Invoice in Preprinted D Details in Xls approval form and send to s

l Finance for Verification a S

Receive the order from Review and Customer Create Customer Start No Customer Approve exists in IFS in IFS System

2. Process relationships for Customer Creation

Billing Request Customer Not Create a New Found in IFS Customer in IFS System AR Application

3. Process relationships for Sales Invoicing

Compile Monthly sales data

Send Statement for Marketing Manager Approval

Enter Sales Invoice in IFS System

Submit Invoice for Finance Review

Submit Invoice for GM Approval

Send the Invoice to Customer

Update Sales Invoices in IFS General ledger

4. Process Relationships for Debit Memo / Credit Memo

Compile Monthly Credit/Debit note data

Approved by the Create Credit Marketing Memo /Debit Memo Manager

Approval by Checked by General Manager Finance Manager

Enter in IFS Sent to Customer System

Update Debit Memo/ Credit Memo in AR

5. Process Relationships for Collections

Invoice and Customer Payment Statements details of Customer

Send the statements to Generate Aging customer Reports

Send Aging Report to GM, FM & Weekly Management Meeting

6. Process Relationships for Receipts

Receipt confirmation Maintain Receipts from either in IFS System bank/Customer

Audit and Post

7. Process Relationships for Prepayment Invoices

Prepayment Received Payment Invoice from Customer

Enter Prepayment into IFS System

Full invoice Actual Invoice Enter Offsetting amount offset Yes Entries in IFS GL prepayment

Calculate * Invoice amount - Amount deduct Outstanding from prepayment Invoice Amount

Enter Oustanding Amount in IFS System

Enter Offseting Entries in IFS GL

Current Business Process Documentation

Critical Requirements

 Creation of Customers by Sales Department  Region-Wise Customer Classification

 Automatic Customer Numbering  Automatic Document Sequencing for AR Transactions

 Tracking of Revenue by Salesperson for Reporting and Collection Activity.  Flexibility to create Debit Memos / Credit Memo manually or Auto created by the Oracle system

 Printing of Invoices, Credit Memos and Debit Memos  Generation of Consolidated Customer Invoice for Period Activity

 Generation of Customer Statements Monthly or on Periodic basis  Generation of Dunning Letters at Division Level and Corporate level

 Customer Ledger Open Items at Zoujaj Corporate Level  Customer Aging Analysis at Zoujaj Corporate Level

 Generation of Customer Aging Reports for Analysis  Enter and process Invoices in Multi Currency

 Enter and Process Partial Receipts, Application of Customer Receipts partially, to multiple invoices, etc  Allow Receipt reversal for wrongly entered / applied receipts

 Process Customer Deposits  Customer Aging Report, Dunning Letters, Customer Statements, Transaction Register, Sales Register and Overdue Statement

Current Benchmark Activities

 Processing of AR Receipts payments  Customer Statements and Collections.

 Reconciliation of Receipts upon receipt of bank debit advice  Monthly updation to IFS General ledger.

Current Bottlenecks

 Manual processes and tracking are still in practice  MS Excel is being used for Reconciliation, Aging Reporting , Customer Statements File Ref: Zoujaj_RD020_AR_Draft 1.3 Zoujaj / Sierra Confidential 30

 MS Word for Customer Dunning Letters. 

Open and Closed Issues for this Deliverable

Open Issues

ID Issue Resolution Responsibility Target Date Impact Date

Closed Issues

ID Issue Resolution Responsibility Target Date Impact Date

Appendix 1 – Account Receivable Questionnaire

Process Analysis Questions Type = Setup Application Response Metric Process Performance What types of customers do you have? Process AR Export, Domestic How do you group your customers for credit limits/credit checks? Process, Setup AR By Location - Foreign or Domestic How do you group your customers for statements? Process, Setup AR as above How do you group your customers for interest charges for late payments? Process, Setup AR No Late Charges How do you group your customers for payment rules? Process, Setup AR With credit period & or without credit period How many customers do you have? Metric AR Approx. Foreign = 20 & Local 25 What type of payment terms do you provide? Setup AR Prepayment, Immediate, 30 Days , 60 Days, Letter of Credit etc. Do you provide split term payment terms? Setup AR Yes Do you provide discount payment terms? Setup AR Yes Do you automatically number new customers as they are created? Process AR N/A Do you automatically number customer business purposes as they are Process AR N/A created? Do you track and record relationships between customers for example, Process AR N/A franchises, subsidiaries, and so on? Do you create reciprocal customer relationships whenever you create a Process AR N/A relationship between customers for tracking purposes? Do you send customers statements? Process AR Yes Do you have multiple "remit to's"? Process AR Yes How multiple “remit to’s” are determined for each customer? Process AR Depending on the terms of contract What credit information is tracked for each customer? Process AR Due date & ageing report Do terms and conditions of customer agreements and/or payment terms Process AR Yes change based upon the status of their accounts? How do you maintain/audit your customer data? Process AR Through spread sheet Do you have a prospect system separate from the receivables customers? Process AR Yes for Sales Department Who has access to your customer database? Process AR Sales Dept., Finance Dept.

Process Analysis Questions Type = Setup Application Response Metric Process Performance Do you have the same customers repeated multiple times in the data files or Process AR Same Customer can be for both the Divisions the same customer for different operating units? – Riyadh , Dammam How do you track customers with different or multiple bill-to and ship-to Process AR By Customer ID addresses? Who maintains your customer information? Process AR Sales Dept. How do you receive notice to create/generate an invoice to bill a customer? Process AR Invoice generated by Sales Dept. How do you link the specific products/services that you sell, with general Setup, Process AR, GL Through Sales Ledger & A/R ledger accounts at Invoice Entry? Do you regularly invoice customers for the same items? Process AR Yes Do you use standard invoice lines with default pricing and default Setup, Process AR Yes accounting information? Do you ever use invoice forms and/or the invoice entry process for Process AR No transactions other than billing customers? Do you use Debit Memos? Process AR Yes How are Debit Memos accounted for? Process AR Drs to A/R Why are Debit Memos used? Process AR Adjustment entries like Additional charges etc What items appear on Debit Memos? Process AR Addl Charges, Incidental Charges Do you use Customer Account Credit Memos? Process AR Yes How are Customer Account Credit Memos used? Process AR Cr to A/R Why are Customer Account Credit Memos used? Process AR Discounts, price reduction, Charges, etc. What items appear on Customer Account Credit Memos? Process AR Sales Ref. Do you enter invoices in batches? Process AR No How are batch invoices defined? Setup AR N/A Do you use batch controls, such as counts and amounts? Process AR No What are the units of measure you use when you bill customers for products Setup, Process AR Each and/or services? Do you require taxes to be established for use when preparing invoices? Setup AR N/A Do you validate the tax rate against a Customer’s Ship To address when Setup AR N/A preparing invoices? Do you have any subsidiaries that bill customers in a foreign currency? Process AR, GL Yes

Process Analysis Questions Type = Setup Application Response Metric Process Performance Are there any other foreign currency issues regarding invoice generation? Process AR, GL Yes Invoices are in Foreign Currencies Like US $ How many invoice types do you have? Setup, Metric AR One How frequently do you invoice your customers? Metric AR Every Day on delivery basis and monthly basis (consolidated invoice). How do you track sales revenue on invoices? How is it reported? Process AR Through GL & Monthly Aging report What different shipping methods do you use? Process AR By Sea & Road How do you number your invoices? Process AR Serially on monthly basis Do you have standard default line items that you use? Process AR N/C Do you have standard default line items that you use or are most lines free Process AR N/C format? What type of units of measure do you use? Process AR Each , Number of Pallets Do you have different price schedules dependent on customer or volumes? Process AR Yes Where are your price schedules maintained? Process AR Sales Contract How often are sales orders invoiced? Metric AR Immediately after shipment What is the criterion to invoice? Process AR Shipment wise What items appear on your invoices (inventory? non-inventory?) Process AR Customer details, Sales details, Unit Price, Sales Value, Credit terms Etc. Who maintains your valid payment terms? What are they? Process AR Sales dept., Credit & Contract Terms What paper stock is used to print the invoices? Process AR Plain Paper with Logo and daily invoices to customers in pre-printed formats. Where are the invoices printed? How many printers and where are they? Process AR Ref to Sales Dept. Pre-printed forms? What remit to address is assigned for your invoices? Process AR Zoujaj Bank Accounts Do you assign shipping charges for your invoices? Process AR Yes How are shipping charges calculated? Process AR Based on destination and rate contract with Transporter How do you calculate your tax charges? What are the rates? Process AR N/A How do you keep your tax rate information up to date? Process AR N/A Why are credit memos used? Process AR Customer Returns, Discount. How are the revenue, receivable, freight and tax accounts configured for each Process AR In separate columns. Freight will not appear

Process Analysis Questions Type = Setup Application Response Metric Process Performance invoice type? in the Invoices How are adjustments to closed periods handled? Process AR In the Next Period Do you ever recognize revenue from a single transaction over multiple Process AR No periods? When do you recognize revenue? Process AR On Dispatch How many General Ledger accounts do you distribute to? Setup, Process AR Nearly 6 Bank Accounts When do you create or recognize outstanding receivables? Process AR On delivery Do you distribute earned and unearned revenue? What are the GL accounts? Setup, Process AR Trade debtors Do you have unbilled receivables? Process AR No Is revenue assignment associated with sales people information? Process AR No Do you assign non-revenue credit to sales people? Process AR No Do you have special revenue recognition for long-term agreements? Process AR Yes How do you maintain and assign salespeople to customers? Process, Setup AR Only 1 Sales Person Do you track Sales Territory Information? Process AR Yes How is Sales Territory Information for tracking purposes derived? (For Process AR Customer example, customer, salesperson, and so on) Do you maintain mandatory and/or optional reviews in your orders cycle for Process AR Yes, Review Customer Payment History for credit risk, legal compliance, and/or other approvals? Credit Risk. Do you have sales representatives? How many? Process, Metric AR No How do you breakup territory for sales? Process AR Country wise How do you assign commissions? Process AR Through trade discounts Do you track non-revenue sales credits? Process AR Yes Do you automatically determine the general ledger accounts for specific Setup AR Yes transactions (for example, receivables, freight, tax, unearned revenue, unbilled receivables, and so on) during Invoice Entry? Do you have a central registry of customers, which supports more than one Process AR Yes business? Will customers of different businesses be supplied with the same items? Process AR Yes How do you enter/manage a credit amount owed to the customer by your Process AR Through customer Accounts company? How do you enter/manage a credit amount owed to your company by the Process AR Through supplier Accounts

Process Analysis Questions Type = Setup Application Response Metric Process Performance customer Do you send customers statements? Process AR Yes Do you ever adjust receivables? Process AR Yes How do you adjust receivables? Process AR Customer Supplier Net off, Debit Memo, Credit Memo. Do you limit the amounts when adjusting receivables? Process AR No What do your aging look like? Process AR Period based Do you have multiple "remit to’s"? Process AR Yes How are multiple "remit to’s" determined for a customer? Process AR Based on the contract What credit information is tracked for each customer? Process AR Contract No, invoice No., Ship No, Nego date, Nego Bank, L/C No, Quantity, Amount, Credit Period Etc. Do you charge finance charges? Process AR Yes How do you charge finance charges? Process AR Through Debit Advice from Banks Do you send dunning letters to customers? Process AR Yes Do collectors actively call customers on delinquent items? Process AR Ref. Shipping dept. What is the process for tracking actions to collect on delinquent accounts? Process AR Ref. Shipping dept. Is the process for tracking actions to collect on delinquent accounts Process AR Ref Shipping dept. automated? Do terms and conditions of customer agreements and/or payment terms Process AR No change based upon the status of their accounts? Do you monitor your collector’s performance? Process AR Yes What metrics are used to monitor collections performance? Metric AR Ageing report Do you run a detailed expense statement periodically? Process AR Yes How often is a detailed expense statement run and to whom is it distributed? Process AR Monthly/Head of sections Do you do cash requirements forecasting? Process AR Yes What sort of buckets do you use for cash requirements forecasting? (For Process AR 30, 60, 90 Days example, 30, 60, 90...) How do you monitor customer account status? Process AR Through aging Do you have a separate aging for collectors? Process AR No Do you use Debit Memos? Process AR Yes

Process Analysis Questions Type = Setup Application Response Metric Process Performance How are Debit Memos accounted for? Process AR Serially on monthly basis Why are Debit Memos used? Process AR To account for charges What items appear on Debit Memos? Process AR Contract No, invoice No., Ship No, Nego date, Nego Bank, L/C No, Quantity, Amount, reason, Etc. Do you use Customer Account Credit Memos? Process AR Yes How are Customer Account Credit Memos accounted for? Process AR Serially on monthly basis Why are Customer Account Credit Memos used? Process AR To account for sales adjustment What items appear on Customer Account Credit Memos? Process AR Contract No, invoice No., Ship No, Nego date, Nego Bank, L/C No, Quantity, reason, Amount Etc. How do you maintain/audit your customer data? Process AR, GL Customer Ledger How are adjustments to closed periods handled? Process AR In the Next period Do you enter your payments in batches? Setup AR No How are batches identified? Setup AR N/A How do your customers generally pay invoices? Single check -- single invoice Process AR Both single check -- multiple invoices multiple checks -- multiple invoices Do you use batch control counts and amounts? Setup AR Yes Do you use more than one bank account and/or cash account? Setup AR Yes Do you have customers who pay other customers’ invoices? Process AR No Do you use lockboxes? Process AR No How many lockboxes do you use? Metric AR What types of payments are received and input? (For example, check, cash, Setup, Process AR Cash, Cheques , TT, L/C, Payment Advice and so on) How do you receive and input payments? Setup, Process AR Through Bank Credit Advice, Deposit Slips Etc. Do you receive deposits and/or prepayments? Process AR Yes Do you receive non-customer related payments? Process AR Yes How are non-customer related payments accounted for? Process AR Transaction wise How do you handle payments without remittance information? Process AR Enquire at source How do you handle payments from unknown sources? Process AR Enquire at source

Process Analysis Questions Type = Setup Application Response Metric Process Performance What are your policies and procedures about adjusting payments? Process AR In accordance with IAS What are your policies and procedures about reversing payments? Process AR In accordance with IAS How often do you adjust payments? Metric AR Period wise How often do you reverse payments? Metric AR Period wise How many payments do you receive in a month? Metric AR Approx. 20 payments per month How many checks are returned by the bank in a period? Metric, Process AR N/A What are the reasons for checks being returned by the bank? Process AR N/A Who applies cash? Process AR Finance Dept How is cash applied? Process AR Invoice – Invoice Basis Do you create charge backs (Debit Items) for customer deductions? Process AR Yes Do you reconcile payments with the bank? Process AR Yes How do you reconcile payments with the bank? Process AR Through Bank statement How often do you reconcile payments with the bank? Process AR Monthly How are bank reconciliation errors handled? Process AR By journal Do you forecast cash collection for collectors? Performance AR No What are your goals for cash collection and DSO? Performance AR N/A How do you enter/manage a credit amount owed to the customer by your Process AR Through AP company? How do you enter/manage a credit amount owed to your company by the Process AR Through AR customer Do you have a central registry of customers, which supports more than one Process AR Yes business? Do you send dunning letters to customers? Process AR By Courier, Email, Fax Are there businesses in different GL Set of Books whom you will need to Process AR, GL Yes invoice? Will you need to invoice for the same items from different businesses? Process AR N/C Who maintains customer information? Process OE, AR Sales Dept. Do you default other information (payment terms, shipping, tax) at the Process OE, AR Yes Customer Level? Can this information be changed and updated at the time of order entry? Process OE, AR Yes Do you require hard copy of the customer purchase order prior to order Process OE, AR Yes

Process Analysis Questions Type = Setup Application Response Metric Process Performance entry? Do you do check customer credit prior to entering an order? Process OE, AR Yes Do you take orders only from approved customers? Process OE, AR Yes Do you have a central registry of customers, which supports more than one Process OE, AR Yes business? Do you use the invoice as a ship confirmation to the customer? Process OE, AR Yes Do you allow partial payments of invoices? Process OE, AR Yes When do you send the invoice? With each shipment? Process OE, AR With each shipment How many "bill-to’s" do you maintain for each customer? Metric OE, AR Depending on order & delivery terms How do you interface to your invoice system? Process OE, AR N/A Do you use the invoice as a ship confirmation to the customer? Process OE, AR Yes Will credit memos be issued automatically upon return, or will you have Process OE, INV, Special procedure special procedures for credit memos? AR How does the credit department get the return goods information? Process OE, INV, Through Shipping Dept. AR Is a hard copy credit memo issued? Process AR Yes Do you have return rules that initiate credit memos? Process AR Yes How do you group your customers for credit limits, credit checks? Process AR Location wise How do you group your customers for statements? Process AR Location wise How do you group your customers for interest charges for late payments? Process AR N/A How do you group your customers for payment rules? Process AR Based on Credit Period How many project customers do you have? Metric AR NA Do you send customers statements? Process AR Yes Do terms and conditions of customer agreements and/or payment terms Process AR Yes change based upon the status of their accounts? Do you ever adjust receivables? Process AR Yes How do you adjust receivables? Process AR With each invoice Do you limit the amounts when adjusting receivables? Process AR No Do you receive deposits and/or prepayments? Process AR Yes Typically, how many project-related payments do you receive a month? Metric AR NA Do you use standard invoice lines with default accounting information? Setup, Process AR Yes

Process Analysis Questions Type = Setup Application Response Metric Process Performance Do you have any subsidiaries that bill customers in a foreign currency? Process AR, GL Yes Are there any other foreign currency issues regarding invoices and/or Process AR, GL Yes payments? What type of payment terms do you provide? Setup AR Partial, 100% against order, 30 Days, 60 Days, Site LC, Deferred LC Do you allow split payment terms? Setup AR No Do you allow discount payment terms? Setup AR No