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7–9 Maintain Customer Orders Database
company uses in the plastics industry to create a product for the customer. All of
these are valuable customer assets, which a company can hold hostage until all
accounts receivable are paid.
The best way to keep this customer assets information in one place is to store it
in the inventory database. The reason is that the inventory database is already set up
in most accounting systems and includes location codes, so that it is an easy matter
to determine where each asset is located. Most important in using this database, a
collections person can designate a customer in the accounting system as one to
which nothing can be shipped (with a shipping hold flag of some kind), which
effectively keeps the shipping department from sending the asset to the customer—
it cannot print out shipping documentation or remove the asset from the inventory
database. This is an extremely effective way to keep customer assets in-house,
rather than inadvertently sent back to a customer that refuses to pay its bills.
The only problem with this best practice is making sure that customer assets
are recorded in the assets database when they initially arrive at the company. Other-
wise, there is no record of their existence, making it impossible to use these assets
as leverage for the collections staff. The best answer to this problem is to force all
receipts through the receiving department, whose responsibility is to record all
receipts in the inventory database. The internal auditing staff can review the receiv-
ing log to verify that this action has been completed. The only customer asset that
may not be recorded in this manner is a set of engineering drawings, which enters
the company site through the engineering department, rather than the receiving
dock. The only way to record this information is by fostering close cooperation
with the engineering manager, who must realize the need for tracking all customer
assets. These steps will result in tight control over customer assets and a better
chance of collecting overdue accounts receivable by the collections staff.
Cost: Installation time:

7–9 MAINTAIN CUSTOMER ORDERS DATABASE

The previous section noted the need for compiling a listing of customer assets
that can be used to apply leverage to customers to collect on overdue accounts.
The same approach applies to customer orders. If a customer has a large open
order with a company, it is likely that the customer will be quite responsive to
pressure to pay for open invoices when those orders are put on hold. Conse-
quently, an excellent best practice to implement is to give the collections staff
current knowledge of all open orders.
Implementation of this practice is an easy one for most companies; just give
password access to the existing customer orders database to the collections staff.
This access can be read-only, so that there is no danger of a staff person inadver-
tently changing key information in a customer order. An additional issue is that
someone must be responsible for flagging customers as ‘‘do not ship” in the cus-