CHAPTER 3: CUSTOMER MASTER FILE
Every account that is opened with “open terms” is being lent your company’s money for the length of that term—for example, net 30. A full understanding of the importance of the job will prevent employees in this role from becoming bored, tired, or discouraged.
3.2 Ownership
The ownership of the customer master file is traditionally within the accounts receivable department because AR must partner with the credit manager analyzing the customers’ financials. Segregation of CMF duties must be strictly enforced to ensure that individuals managing the CMF do not have access to processes like assigning credit lines, placing an order, billing, or cash application. The CMF position must be tightly controlled and managed to ensure that customer information is validated. Limited access removes the possibility of the file being tampered with. Some larger organizations are creating a separate master file group that manages customer and vendor master files. This is segregation of duties at its finest and makes for easy comparison to flag businesses that you both sell to and buy from.
3.3 Customer File Documentation
Before setting up a customer master file, it’s a good idea to think through how it will be used, by whom, and for what purposes. Consider interviewing areas of the company like sales, marketing, credit managers, billing, cash application, deductions, and the collections staff, who can provide guidance for what information to include. This information, and all legally required information to open an account in the system, should be on the Customer Application form, along with requesting supporting documentation to open the account (e.g., license, passport, tax certifications). All the information required should be detailed in the AR Credit Policy and Procedures.
Every time a customer is added or changed in the system, supporting documentation must be kept to assist the auditors in verifying that the additions and changes are legitimate.
Note: Customer File information will vary based on whether a record is for a new or existing customer, and whether business-to-consumer (B2C) or business-to-business (B2B). Certain information must be documented and kept on file for the life of the customer relationship, as well as to comply with government requirements. NEW CUSTOMERS The CMF team may be charged with assisting the credit manager with research. The CMF team must thoroughly understand what information and documentation are required and how to verify that data before proceeding with the next steps. We will begin here from the point in time when the research has been completed and the credit manager has assigned a line of credit and approved the new customer to be entered into the CMF.
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THE ACCOUNTS RECEIVABLE SPECIALIST CERTIFICATION PROGRAM E-TEXTBOOK
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