Abdul Khaliq
Empowering Finance Professionals with Strategic Career Progression | Sharing Knowledge to Boost Learning
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Accounts Receivable Internal ControlsOverview | Control | Risk MitigatedAccounts Receivable is an integral function of finance structure.Ensuring timely collections, steady cash inflow, and mitigating risk of bad debts.Their contribution to working capital management is vital. Organizations depend on the accuracy of the cash flow forecast they provide to meet their financial obligations. Hence, it is essential to have adequate internal controls in place to ensure the efficacy of their performance and that they deliver as expected.Here's the list of AR controls, which provides an overview of the control and the risk mitigated.1. Segregation of DutiesSOD in Accounts Receivable is a comprehensive internal control strategy that involves dividing key tasks and responsibilities among different individuals or departments within the receivables process.2. Credit Approval ProcessThe credit approval process is designed to assess customersโ creditworthiness before extending credit terms. It ensures that only customers with a reasonable likelihood of payment are granted credit.3. Invoice Approval and ReviewThe invoice approval and review process ensures accuracy in invoicing and helps prevent errors or fraudulent activities.4. Aging Reports and Regular ReconciliationAging reports and regular reconciliations help monitor and manage outstanding receivables, providing insights into the status of payments.5. Cash Application ControlsCash application controls ensure that customer payments are accurately recorded and applied to the correct customer accounts.6. Collections and Follow-Up ProceduresCollections and Follow-Up Procedures are internal controls designed to manage outstanding receivables effectively and ensure timely payment from customers.7. Write-off Approval ProcessThe write-off approval process ensures that uncollectible accounts are properly identified and approved for write-off.8. Customer Master Data MaintenanceAccurate customer information is crucial for billing, communication, and collection activities.9. Customer Statements and CommunicationRegular communication with customers through statements helps maintain transparency and clarity regarding their outstanding balances.What else would you add?๐ก ๐๐ฉ๐ช๐ด ๐ช๐ด ๐ฑ๐ข๐ณ๐ต ๐ฐ๐ง ๐ต๐ฉ๐ฆ "๐๐ณ๐ข๐ค๐ต๐ช๐ค๐ข๐ญ ๐๐ฑ๐ฑ๐ณ๐ฐ๐ข๐ค๐ฉ ๐ต๐ฐ ๐๐ค๐ค๐ฐ๐ถ๐ฏ๐ต๐ด ๐๐ฆ๐ค๐ฆ๐ช๐ท๐ข๐ฃ๐ญ๐ฆ" ๐ค๐ฐ๐ถ๐ณ๐ด๐ฆ ๐ ๐ต๐ฆ๐ข๐ค๐ฉ ๐ต๐ฐ ๐ช๐ฏ๐ฅ๐ช๐ท๐ช๐ฅ๐ถ๐ข๐ญ๐ด ๐ข๐ฏ๐ฅ ๐ค๐ฐ๐ณ๐ฑ๐ฐ๐ณ๐ข๐ต๐ฆ ๐ต๐ฆ๐ข๐ฎ๐ด.#MAKAlpha#TheFinanceMasterclasscoming soon!------------------------------------------- FollowAbdul Khaliq+ ๐ - Sharing the essence of 20+ years of journey.- I mentor and train finance and account professional. DM for details.- You can download all my work in PDF format by visiting my profile.
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Rakesh Meshram
Project Management PMPยฎ|| Data Analyst || Business Analyst
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Very well explained ๐ From control perspective I would like to add following points in attached process like -*Reviewing dormant customer accounts (non traded) quaterly will help to keep the masters upto date.*Timely escalations to commercials/sales colleagues for any agreement violations and delay in payments. *Leving late payment fee on overdue if any.*Debt >90days dispatching dunning process.
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Ahmad Usman (ACA)
Audit&Tax Enthusiast//Risk Mgt//Internal Control//Logistic
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Abdul Khaliq I need some guidelines on risk assessment n mitigation
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Jared O. Awuor, MBA, BML, CPA, DipBM, CertBM
Accountant at Suba & Associates Co.
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Worthy reading and being a polite reminder on how AR should carried out at all times. Thank you.๐ฏ๐
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Islam Yousri
CIA Part 1 | CertIFR | Internal Auditor | External Auditor | Finance Specialist | Data Analyst | Risk Specialist | Anti-Fraud
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Thanks for sharing ๐
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Ahmad Usman (ACA)
Audit&Tax Enthusiast//Risk Mgt//Internal Control//Logistic
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Nice piece
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Enoch GAHERERI MUHURA
Reporting and Intercompany Accountant at Liquid Tรฉlรฉcommunications DRC SA| Experienced auditor
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Daniel Kodila
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Rodney Horsman
Accountant
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Well done.
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Novalian Kurniasih
Full-time learner | Zen Enthusiast | Hospitality | Accounting | Data Processor
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Hi do you write a book or article about this? For thesis purpose
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Slimane Benterki
Tax supervisor #Trader #Exporter #Freelancer
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Ahlam BISSERNI
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Imtiaz Hussain
Attorney and Management Consultant at IH Consulting Group
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Thank you Abdul Khaliq for sharing valuable post.
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Abdul Khaliq
Empowering Finance Professionals with Strategic Career Progression | Sharing Knowledge to Boost Learning
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Intercompany Transactions ExplainedDefinition | Transactions | Elimination | ExampleEntities with various subsidiaries have challenges reconciling and eliminating the due to and due from at the consolidation level. Here are some of the challenges:1- Company A sent a debit/credit note to Company B. Company B failed to record it before the month-end close.2- Company C sent the debit note late to Company D. Company D had already closed their books and recorded it the following month.3- Company E recorded the transitions as I/C receivable, but Company F recorded them as Accounts Payable.4- Company G sent a debit note but Company H had a dispute with it, didn't record it and closed the books without resolving it.5- Company I sent a balance confirmation request, but Company J didn't confirm the balance before the month-end close.Here are some suggestions:1- Keep a cut-off date for sending/receiving/recording/reconciling intercompany transactions.2- Every company must adhere to the deadline.3- Every company must confirm the balance in writing. That is also needed for the audit. 4- Every company must prepare an intercompany reconciliation and promptly address the variances. 5- Any disputed transactions must be resolved.There are two things you need to do to make the elimination easier:1- Before the month-end close, all intercompany should be reconciled, and thebalance must be confirmed. There is no other way. 2- Everyone involved must understand the elimination process and the significance of reconciling intercompany balances.The information included will help you create awareness of the importance of reconciling intercompany before the month-end close. Here's what is included:1- Definition and Example2- Types of Intercompany Transactions3- Consolidation and Elimination4- Impact on Financial Statements and DisclosuresExample Included:Company A pays $10,000 on behalf of Company B for office supplies.โข Company AI/C Receivable: $10,000 Dr Cash: $10,000 Crโข Company BOffice Supplies Exp.: $10,000 Dr I/C Payable: $10,000 CrConsolidation Processโข When preparing consolidated financial statements at the parent level:โข Eliminate the intercompany transaction:โข Decrease Company A's Intercompany Receivable by $10,000.โข Decrease Company B's Intercompany Payable by $10,000.After Consolidationโข Consolidated Income Statement: Reflects the office supplies exp. by Company Bโข Consolidated Balance Sheetโข Decrease in Cash paid by Company Aโข Eliminates the intercompany receivable and payable. #MAKAlpha #TheFinanceMasterclass coming soon!------------------------------------------- FollowAbdul Khaliq+ ๐ - Sharing the essence of 20+ years of journey.- I mentor and train finance and account professionals. DM for details.- You can download all my work by clicking "View my portfolio" above.
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Abdul Khaliq
Empowering Finance Professionals with Strategic Career Progression | Sharing Knowledge to Boost Learning
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Accounts Receivable ProcessCustomer Acquisition to Payment CollectionSales and revenue are great, but only once cash is collected.I have seen the sales team's excitement and celebration when acquiring new customers.I have also experienced teams pushing to get the credit approvals and customer agreements signed without performing adequate due diligence and credit checks. That sometimes leads to cash flow issues, payment collection delays, and bad debts.So sales are great, but timely cash collection is more significant. That's why every companymust have robust customer due diligence and accounts receivable processes, from the largest to the smallest.I have prepared a step-by-step process for you to replicate and adjust according to the type and size of your organization.You'll find details of these steps:1- Customer Acquisition2- Negotiating & Diligence3- Order Processing4- Invoicing 5- Monitoring & Follow-up6- Payment Due Reminders7- Payment Collection8- Reconciliation9- Record Transactions10. AR Reporting11- Delayed Payments12- Dispute ResolutionWhat else can you add?#MAKAlpha #TheFinanceMasterclass Coming Soon!------------------------------------------------------------- Follow Abdul Khaliq + ๐ - Sharing the essence of 20+ years of journey.- I mentor and train finance and account professionals. DM for details.- You can download all my work in PDF format by visiting my profile.
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Abdul Khaliq
Empowering Finance Professionals with Strategic Career Progression | Sharing Knowledge to Boost Learning
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Accounting to ReportingYour journey from accounting to reporting does not start with transactions.It starts with designing a Chart of Accounts that is fit for purpose, not for existing needs, but that caters to the growth of your organization.Once you have designed your CoA in a certain way, redesigning it may take much work.Transactions are the second most crucial element of your entire accounting system. Your reporting will depend on the level of accuracy of your transactions.The third thing you want to focus on is mapping your trial balance and the medium you use for consolidation and reportingโany tool you have, whether Excel or some other software, can be used.I have designed the process keeping all of this in mind. What do you think?Please keep this in consideration when you design your processes:๐๐๐๐ฅ๐ง ๐ข๐ ๐๐๐๐ข๐จ๐ก๐ง (๐๐ข๐) A well-structured Chart of Accounts (COA) is the backbone of an organization's financial management and reporting.When designing a CoA, keep this in mind:โข Scalability and GrowthA thoughtfully designed COA can accommodate future growth seamlessly. โข Financial Analysis and ReportingA comprehensive COA allows for the customization of reports to meet these evolving demands, whether for internal management or external stakeholders.๐ง๐ฅ๐๐ก๐ฆ๐๐๐ง๐๐ข๐ก๐ฆ Transactions are nothing but an accumulation of:โข Accuracyโข Reliabilityโข Controlsโข Attention to Detailsโข Adherence to Policies & Procedures and Delegation of Authority๐ง๐ฅ๐๐๐ ๐๐๐๐๐ก๐๐ The Trial Balance is not your P&L or your Balance Sheet. It is a consolidated position of all transactions based on the Chart of Accounts totaling zero. However, its accuracy is crucial for your consolidation and reporting.๐ ๐๐ฃ๐ฃ๐๐ก๐ The accuracy of the mapping between the ERP system and the consolidation tool is the key. When mapping, ask yourself:โข How and what do you want to see as an output, i.e., management or financial reporting?๐ฅ๐๐ฃ๐ข๐ฅ๐ง๐๐ก๐Now, the quality of your reports depends on the consolidation and reporting tool you use or how brilliant you are in designing your Excel models. #MAKAlpha #TheFinanceMasterclass coming soon!----------------------------------------- FollowAbdul Khaliq+ ๐ - Sharing the essence of 20+ years of journey.- I mentor and train finance and account professionals. DM for details.- You can download all my work in PDF format by visiting my profile.
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Abdul Khaliq
Empowering Finance Professionals with Strategic Career Progression | Sharing Knowledge to Boost Learning
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Financial Controller PathwayEducation | Technical Skills | Soft Skills | Leadership SkillsHaving a well-laid-out plan in front of you with every move meticulously planned is a half-battle won.The other half is executing the plan. This is where most of the struggle is. Execution!Here's your step-by-step pathway to becoming a Financial Controller. Every step is planned for you, starting from graduation to financial controller. Now, you have to customize this plan for your situation and execute it. Go for it!These steps are provided as overall guidance. Some steps can be completed before the others. For instance, you may prefer to complete your CA/CPA before you start the first job. Or begin focusing on your soft skills when you get your first job.What other steps can you think of, and how will you plan them?This is your pathway:1- Bachelor's DegreeObtain a bachelor's degree in finance and accounting or business.2- Entry-Level PositionObtain a bachelor's degree in finance and accounting or business.3- Technical SkillsAcquire technical accounting skills, including financial statement analysis and financial reporting. Focus on mastering accounting software and Excel.4- Professional CertificationPursue a professional certification such as CPA, CA, ACCA, CMA, or similar.5- Job RotationIt is time to look for job rotation opportunities if you have not already done so. 6- Accounting ProcessesBy now, you should have a better understanding of accounting processes. Proactively look to improve current processes.7- Acquire Soft SkillsIt is almost time to assess your soft skills and what you want to improve. Communication is a vital skill to have.8- Team ManagementDemonstrate that you have the skills to manage teams. 9- Progressive ExperienceNow, you have to look for opportunities within or outside of your organization to move up the career ladder to positions like senior accountant, financial manager, or finance manager.10- Technology ProficiencyBecome skilled in using financial software such as ERP systems. 11- Compliance & Risk MitigationFocus on strengthening your knowledge and expertise in internal controls, risk mitigation, regulatory compliance, and managing audits.12- NetworkingAttend finance and accounting conferences, join industry associations, and connect with peers and mentors. 13- Mentorship or CoachingIdentify a seasoned financial professional who can serve as your mentor. Alternatively, consider hiring a career coach.14- Prepare for LeadershipAttend leadership training programs, seek mentorship, and develop strategic thinking skills. 15- Pursue the FC PositionYou are ready now. Look for Financial Controller positions internally or externally.#MAKAlpha#TheFinanceMasterclassComing Soon!-------------------------------------------------------- FollowAbdul Khaliq+ ๐ - Sharing the essence of 20+ years of journey.- You can download all my work in PDF format by visiting my profile.
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Abdul Khaliq
Empowering Finance Professionals with Strategic Career Progression | Sharing Knowledge to Boost Learning
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Income Statement - Revenue to Net Profit MovementWhat causes the change from the revenue to EBITDA to Net Profit?Observing the movement on the chart below will help you understand the cause of change. Below are the explanations and calculations for each step depicted on the chart:Revenueโข Revenue, also known as sales or turnover, is the total amount of money a company generates from its primary business activities. COGS โข COGS refers to the direct costs associated with producing or manufacturing the goods or services that a company sells. Gross Profitโข Gross Profit is the amount of money a company has left after subtracting the direct costs of producing its goods or services (COGS) from its total revenue. โข GP = Revenue โ GOGSOPEXโข OPEX are a companyโs ongoing costs to operate its business. Include items such as rent, utilities, salaries, and marketing expenses. Other Incomeโข Other Income refers to revenue generated by a company that is not directly related to its core business operations. This can include income from investments, interest, or other sources outside the company's primary activities. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization)โข EBITDA is a measure of a company's operating performance. It excludes interest, taxes, and non-cash expenses like depreciation and amortization.โข EBITDA = GP โ OPEX + Other IncomeEBIT (Earnings Before Interest & Taxes)โข Depreciation and amortization are non-cash expenses that represent the allocation of the cost of tangible and intangible assets over time. โข EBIT = EBITDA โ DepreciationEBT (Earnings Before Taxes)โข Interest expenses represent the cost of borrowed funds. Subtract interest from the Adjusted EBITDA.โข EBT = EBIT โ Interest ExpenseNet Profitโข Subtract taxes from Earnings Before Taxes to arrive at Net Profit.โข Net Profit = Earnings Before Taxes - Taxes#MAKAlpha#TheFinanceMasterclasscoming soon!------------------------------------------- FollowAbdul Khaliq+ ๐ - Sharing the essence of 20+ years of journey.- You can download all my work in PDF format by visiting my profile.
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Abdul Khaliq
Empowering Finance Professionals with Strategic Career Progression | Sharing Knowledge to Boost Learning
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Accounts Payable ProcessReceiving Invoices to Releasing PaymentAccounts Payable is close to my heart. I started my finance and accounting career as an AP Accountant.Probably that's why the first course I developed was on "A Practical Approach to Managing Accounts Payable."Performing that role allowed me to acquire valuable knowledge and experience. The knowledge acquired at that time laid the groundwork for many years to come.If you are an accountant payables, always remember that your job is not merely accounting. You are the gatekeeper of every expense paid in the company. Your role is significant, from receiving and validating invoices to accurate expense coding to ensuring the correctness of every cent paid. - If you do not do three-way matching, never received items may be paid.- Your financial reporting will be inaccurate if you misallocate a GL code.- If you pay the incorrect amount, that's a potential loss to the company.Now you know how significant your role is.Broadly, this is what your role entails:1. Invoice Receiptโข Accounts Payable (AP) accountants are responsible for receiving vendor invoices.2. The Digital Ageโข Embrace the digital age by implementing the process of document scanning and digitization of invoices. 3. Primary Responsibilityโข It is the primary responsibility of AP Accountants to validate invoices thoroughly. 4. Invoices Validationโข Develop a keen eye for identifying discrepancies or errors in invoices. โข It prevents financial discrepancies and potential disputes5. Three-Way Matchingโข The three-way matching is a best practice in AP. โข Cross-referencing the invoice with the purchase order and receiving report.6. Understanding Codingโข AP accountants must understand the intricacies of expense coding and account allocation.7. Expense Allocationโข AP accountants must correctly assign expenses to the relevant departments or accounts within the organization.8. Organizational Prioritiesโข Approval hierarchies involving various stakeholders, such as department heads, managers, and finance.9. Approval Workflowโข Learn strategies for optimizing the approval workflow by setting deadlines and communicating efficiently with approvers.10. Payment Termsโข Prepare payments based on the approved invoices and payment terms agreed with the vendor.11. Payment Methodsโข Payments can be made through various methods, such as checks, electronic funds transfers (EFT), or credit cards.12. Segregation of Dutiesโข It is crucial to segregate the invoice and payment processing to avoid errors and fraud. What else can you add?๐ก ๐๐ฉ๐ช๐ด ๐ช๐ด ๐ฑ๐ข๐ณ๐ต ๐ฐ๐ง ๐ต๐ฉ๐ฆ "๐๐ณ๐ข๐ค๐ต๐ช๐ค๐ข๐ญ ๐๐ฑ๐ฑ๐ณ๐ฐ๐ข๐ค๐ฉ ๐ต๐ฐ ๐๐ค๐ค๐ฐ๐ถ๐ฏ๐ต๐ด ๐๐ข๐บ๐ข๐ฃ๐ญ๐ฆ" ๐ค๐ฐ๐ถ๐ณ๐ด๐ฆ.#MAKAlpha#TheFinanceMasterclasscoming soon!------------------------------------------- FollowAbdul Khaliq+ ๐ - Sharing the essence of 20+ years of journey.- You can download all my work in PDF format by visiting my profile.
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Abdul Khaliq
Empowering Finance Professionals with Strategic Career Progression | Sharing Knowledge to Boost Learning
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Payroll Processing - SOD between Finance and HRPayroll can be a political tug-of-war between finance and HR.I have seen that happen in my professional career. Twice!I have experienced two scenarios.Scenario OneThe company was rapidly growing. Both finance and HR needed more resources and were overwhelmed with work. They were fighting that payroll is the other team's responsibility.Scenario TwoRestructuring was taking place. Jobs were being evaluated. The team with the most responsibilities gets to retain more team members, and some can even get their jobs evaluated higher (hint: that's promotion).Guess what?This time, both teams were fighting to retain payroll processing. Nevertheless, I have end-to-end payroll processing with HR in most cases. Finance is the reviewer and disburser of funds. Based on that, I have presented this distinction of roles.Well, I know. A lot depends on the organization's size, industry, management preference, policies, and procedures. One thing is certain: the less people have access to and knowledge of payroll details, the better it is for confidentiality. That being said, it makes sense that payroll processing sits with HR, and Finance only reviews it for accuracy and compliance without having access to specific employee details. This is the overview of the process:Human Resource- New Hires and Terminations- Employee Data Management- Benefit Administration- Payroll Queries- Compliance- Payroll ProcessingFinance- Payroll Review- Tax Compliance- Payment Distribution- Accounting Entries- Payroll Reporting- Audit Support (Joint Responsibility)What is the process based on your experience?#MAKAlpha#TheFinanceMasterclassComing Soon!-------------------------------------------------------- FollowAbdul Khaliq+ ๐ - Sharing the essence of 20+ years of journey.- I mentor and train finance and account professionals. DM for details.- You can download all my work in PDF format by visiting my profile.
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