FNSACC312 Administer Subsidiary Accounts And Ledgers Management

Task

Receivable subsidiary ledger shows WHO and HOW MUCH owe to the company. So this specific information make you easy to check them, and it is helpful to manage the risk of they are going bad debt. For example, you can notify your clients to pay off their debt when you see the unacceptable amount as A/R owed by them on the ledger. Also, as it consists of every transactions on the journals and is separated by each debtors, it can be helpful to create A/R general ledger as well.

According to ATO, the bad debt must be genuinely seemed uncorrectable. The evidence of some reasonable and commercial attempts such as notification letter, telephone appointment, and repayment arrangement suggestion are required before it is written off. Or the evidence of debtor’s obvious financial problems such as its bankruptcy. Typically, the bad debt has to pass the certain period set by the creditor to be written off.

Before making a payment for the invoice with discrepancy on your account payable, you can use following 3 ways below to identify what occurs the discrepancy between the invoice/receipt and A/P from particular creditor. This will be the first step.

2-way matching Purchase order quantity = invoice quantity

Purchase order unit price = invoice unit price

3-way matching Purchase order quantity = invoice quantity = Receipt quantity

Purchase order unit price = invoice unit price

4-way matching Purchase order quantity = invoice quantity = Receipt quantity = Documents accepted

Purchase order unit price = invoice unit price

Secondary, identify any missing or incorrect transaction entered with matching to invoice/receipt. And fix the entry accurately.

Thirdly, Collect the data which is the entries fixed and identified from earlier 2 steps and make a report onto any types of formats the organization use such as spread sheets.

Fourthly, Get any missing or outstanding invoice from supplier. If you identify the incorrectness with supplier, you will tell them.

After the steps following above has been done, proceed to match the supplier statement and your A/P.

1. Letter of demand – They would firstly take this way to leave the evidence of notification. The letter will be under the name of layer or the agency so it might more impact to the debtors rather than just creditors.
2. Credit investigate – They can conduct researching of creditor’s financial situation such as assets, whether they have other credits, to determine their ability of payment. This will be helpful to the next one as well.
3. Repayment negotiation – They might use negotiation skills to encourage the creditors to repay. It might include reducing of the repayment amount per once, or repayment plan suggestion to the creditors.

The key requirements of complying with reasonable purpose test is “Consider the debtor’s financial or any circumstances as much as creditors can with the information that they have about debtors”. When creditors know the debtors are in the situation where they don’t have choice such as bankruptcy, economic violence etc, or it is obvious the action they may take will not work in any way, those action would not satisfy the requirements of complying with reasonable purpose test.

You can set up items depending on which items you assume it is necessary to know. For example,

• Debtor’s name
• Types of debt (description of debt)
• Accumulated repayment
• Rate (finished pay-off ratio)
• Limit (limit of the amount of debt that you can allow)
• Current balance
• Minimum pay (the amount the debtor must pay off at one time during the period set by creditors)
• Date (due date of next payment)

These items will be helpful to manage or analyze the debtors and their debt on spreadsheet. The from of spreadsheet accept changing the contents and recalculate accurately. Additionally, you can put some charts on to the spread sheet showing current debt you are owed and paid-off balance. This is also able to be changed as soon as you make any contents change and it reflects to new shape of charts. Flexible about any changing would be the advantage of spredsheets.

And also you can highlight the doubtful debtors which notify you to monitor the debtors carefully.

What you can do with the helpful spreadsheet are you can identify who, when, how much owe and paid-off, or even the ratio of how much they have paid off already. It is depending on how you want to manage and track the debtors.

• Consumer Credit Code
• Privacy legislation
• Code of practice
• Australian Competition and Consumer
• Prudential Regulation
• Financial Institution Code
• Credit Reference Association of Australia
• Electronic Funds Transfer code of conduct
• Financial Transaction Reports
• Cheques and Payment Orders
• Corporate Law

My trainer gave this list as a hint

Industry code of practice is a guideline to protect the dealing between consumer and suppliers in certain industry. So each industry has this code of practice generally. For example, Food and Grocery Code of Conduct for food and grocery industry, Franchise Code of Conduct for franchising industry. These codes of practices are intended to protect consumers.

Industry compliance requirements

Reconciliation to monitor financial account policy and procedure are commonly set up such as following bellow

• Reconciliation must be conducted certain period set out by the organization (Such as each end of the month or every 3 months)
• The items that must be reconciled such as Bank account, A/R, A/P, Fixed asset, Commonwealth Accounting and Reporting System (CARS), General Ledger Accounts, eCommerce providers
• How and Who complete the procedure (Such as “Reconciliation is conducted by 2 individuals separately”)
• Exception (Such as “All policy and procedure must be followed unless/except authorized accounts used for student intern training”)

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