CHAPTER 3: CUSTOMER MASTER FILE
3.1 Introduction
An effective customer master file (CMF) contributes to AR operational excellence by helping an organization: prevent inaccurate charges, reduce fraud,
expand customer knowledge, ensure regulatory compliance, manage revenue sources, track payment histories, And, save money.
While primarily a tool for the billing and accounts receivable departments, a top-notch customer master file is valuable to the whole company. A CMF provides a central database that contains all pertinent information about each customer. Collectively, it provides a profile of the firm’s customer base, allowing staff members to identify customer patterns, analyze buying habits, and estimate their likelihood to purchase new products. Such data can, in turn, be used to enhance sales, marketing, customer service, and product-development efforts. A reliable database of customer information makes your company easier to do business with, giving you an advantage in the ever more competitive marketplace. It is considered a best practice to compare this file to your company’s AP department vendor master file to leverage money your company owes against companies that owe you money, as well as to ensure that the data is correct in both master files. Many react to this best practice by protesting, “We don’t sell and buy from the same companies.” But how can you be so sure in a world of mergers and acquisitions? You may be surprised to find the same companies in each master file. The CMF is the key to quickly determining the status of customer orders and the accuracy of customer information that should be applied consistently to each document in the O2C process (such as the sales order, order confirmation, packing slips, and invoice). The Customer Master file is also crucial for accurate invoicing, which is the single biggest factor in customers paying on time. A CMF specialist should validate information provided to ensure the accuracy of the data. For example, verifying that the bill-to information (consumer or accounts payable) is correct will ensure that the invoice reaches the right hands to process payment, thus enabling the customer to pay on time. If the credit manager collects most of the data, validating the information is necessary because it serves as an audit of the data before it is entered into the system. Customer master data specialist is typically an entry-level position. Yet it involves handling critical customer information, and mistakes can negatively impact the company. It is important to understand that while this position may be entry-level, its responsibilities are by no means “entry level”— especially if the position is charged with research and is focused on protecting the company’s cash.
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THE ACCOUNTS RECEIVABLE SPECIALIST CERTIFICATION PROGRAM E-TEXTBOOK
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