Table of contents

1. Objective and Scope

The purpose of this document is to explain how to perform the internal controls for Accounts Receivable process. 
The Internal Controls mentioned in this OP aims to ensure:

  • Compliance with AR procedures
  • Application of Process Expert's instructions and guidelines
  • Assure the mitigation of financial risk in key tasks

This operating procedure (OP) applies to all EMEA companies and customer payments for invoices factored to Solvay SA. The only exception are related to controls "Review of receivables not assigned to 0231" and "Monthly review receivables in local system" in which we analyze all Regions (EMEA, NAFTA and ASIA) in the first one and EMEA and Asia in the second one.

2. Definitions

  • SBS: In the current document, "Solvay Business Services" will be replaced by its abbreviation "SBS".
  • OTC AR: Order to cash Accounts Receivable
  • OTC CM: Order to cash Credit Management
  • OP: Operating procedure
  • 0231: PI system for Worldwide Accounts Receivable and Payable
  • CM: Credit Manager
  • DO: Doubtful invoice
  • EMEA: Europe, Middle East and Africa
  • PE: Process Expert

Scope

ERP

References

 

4. Add the link to SAP procedures (when it exists)

Attachments

5. Add the link to attachments (to be stored in AODocs or GDrive) or external links

3. INTERNAL CONTROLS

3.1 Daily review of Unallocated payments

The control of the Unallocated cash is done in order to ensure that no payment received is open on the sub-account without having been correctly addressed and escalated asking more details.

 

Use FL3N transaction in PI1 system to check the unallocated payments as below:

Select the document type "TI" (transfers IN) and then search by "unallocated" in the text field. The owner of this task should do the follow-up by sending reminder (please analyse and decide for each case the periodicity of reminders).

 

For PF1 and WP1, the payments are posted on customer accounts by RtR (automatic postings during the bank statements upload). Therefore RtR should forward a case to OTC in case of unallocated payment in which they are sure it is customer related. Regarding Poland (receivables not assigned to Solvay SA), as the cash allocation is all manual, a ticket in Freshdesk should be created to justify a possible unallocated.

  • Very important to insert "unallocated" in TI text during cash allocation to easily identify the real unallocateds. Vendor, Abbot and IS issues should have the justification in the text (ticket number) but it shouldn't mention unallocated.

On a daily basis the following file is updated:

https://docs.google.com/a/solvay.com/spreadsheets/d/1EpMHi4vG9yZUU2P9x7Val9GMiR_aN50ytj87XDGiUAE/edit?usp=sharing

  • All cases should be justified with the reason and mention to whom it was escalated as below
  • The image with the unallocated payments should be copied from the file and added to the daily email

 

Example:

3.1.1 Escalation procedure

For unallocated cases for more than three months and if no answer received or if is not enough to allocate the payment, the team member doing the controls should send an email to Accounts Receivables Process Expert, explaining the reason why it is being escalated (mention if no answer received, doubts, proposal). In case it is interco related or any technical constraint, a reminder should be sent to the company related or to IS.

 

3.2 Weekly review of Unmatched payments

The objective of this control is to assure that all non-matched payments equal or above 50.000,00 EUR have been analyzed and escalated. Therefore a list with all those items has to be justified by AR team.

This weekly control must be done on Thursdays.

In PI1:

Open FBL5N transaction and chose the following variant:

Execute 

The following screen appears 

PF1 and WP1

This extraction should also be done for Poland and Reverse Factoring customers. Therefore, enter in FBL5N and choose the following variant (Cc 0005 for PF1 and Cc ZFR3, 8090, 6068, 7531 and 6268 for WP1).

For each of the unmatched amounts, the AR Specialist should update the file below and describe the reason of non-allocation and mention to whom it was escalated:

https://docs.google.com/spreadsheets/d/1jZ3SPuieMVSzZppGdeZEHPC4JpeEdvGibjJYNP-cGKk/edit#gid=1052285975

Example:

  • The image with the unmatched payments should be copied from the file and added to the daily email

3.3 Monthly review of receivables not assigned to Factoring company

The principle is to have all customers/receivables from a company with convention with Solvay SA/Solvay SFA assigned to the Factoring company (Cc 0231/4044). Therefore, the objective of this control is to show evidence that customers not assigned have a valid reason in the "Long text" field for not assigning its receivables.

This control should be done one time per month on the D+2 in the two local systems assigning to Solvay SA/Solvay SFA: PF1 and WP1. 

Open Z3F_FA_MD_REPORT transaction in local systems and choose the following variants in all systems:

 

Execute 

The following result is showned: 

We can see a line per customer and in the "Long text" field it should be inserted the reason of not assignment to companies 0231/4044. The valid and justified main reasons are:

  • Legal reasons (Ex. Italian law)
  • Private persons
  • Old doubtful
  • Other local specificities

Other reasons from these ones should be analysed and discussed with Credit Manager and CAM.

This result should be extracted to excel as below:

Click on 

Execute 

Save the file in your desktop 

Finally, add this excel file to the email with the remaining controls. 

Example of the file: 

MD Report control.xls

3.4 Records of doubtful receivables and losses based only on a supporting document communicated by CM

For bad debt customers, we should provide the request in which OTC AR received the request to post a customer into doubtful status only if requested by Audit company. In this case, we should search in Freshdesk the request case and send it to the requester.

4. Reporting controls


The email should be send to the following addresses:

Process Expert Accounts Receivables

Claudrik.darnet@solvay.com

OTC Manager

julia.cabrita@solvay.com  

Accounts Receivable team leaders: 

Paula.simoes@solvay.com; Rafael.Lindoso@solvay.com and amporn.sae-tae@solvay.com

Accounts Receivables team mailbox

solvay.ar@solvay.com