Pre or Post Invoicing Sytem?

In 1978 when I was appointed as Credit Control Supervisor, Sterling Drugs (later change to "Health"); the company was using Post Invoicing System. Meaning, Invoice is prepared after the goods were shipped and signed acceptance by the Client. Once the Chop & Sign Delivery Order is signed, a copy shall be forwarded to Credit Control Department to issue its Invoice. The said Invoice will only be posted to the Client accordingly.

Now, can you imagine the time lost - from the time the goods left the Warehouse, delivered to the Client's premise, bring back the Delivery Order, prepare and post the Invoice while posting again takes few days ( payment will only be made 30 days from the date of the Invoice). In view of this System and Procedure, the company lost about 14 - 30 days.

The Client normally will take 30 - 60 days to issue the check and will take few days to reach the office. Thus will effect the Cash Flow tremendously.

Realising this inefficiency and ineffectiveness, I personally introduced "Pre-Invoicing" system and procedure. It involved Sales & Marketing Department, Warehouse Department and Credit Control Department.

Once the Salesperson placed the order and submit to Warehouse Department, Stock availability and Credit Limit will be established. Immediately, Invoice is prepared by Credit Control Department. The Warehouse Department staffs will then deliver the Goods together with the Delivery Order and Invoice. Thus, the 30 days credit period is counted from the day the goods were received. Henceforth, there will be no idle time lost. As a result, the Credit Report or Aged Listing Report had been enhanced and reflected the true transaction period.

Sterling Health had investment (factories) in 52 countries throughout the world. Before I introduced the system and procedure, sad to say that Malaysia was always the 3rd last company to submit its report to New York via telex.

Eversince my system and procedure was implemented, we were always in the TOP 3 countries to submit the report to New York Headquarters. The Vice President Finance from New York HQ came down to Malaysian office to understudy my system and procedure. Since then, all subsidiary and associate companies of Sterling Health throughout the world, ADOPTED my system and procedure.

As a reward I was given 15% salary increment ( a 16 years history was broken at that time - 1978 since no staff had ever recieved such a high increment). Then, I was promoted to Cost Accountant and thus became the youngest accountant in Malaysia - 23+ years old.

Want to be an "Accountant" like me?

Accounts or accounting has always been related to "figures". For those who are not good writing and lazy to read, accounts will enable to tell you almost the whole story about the company's business.

When I was in secondary school we only learned "Commerce" which is quite related to accounts. As soon as I finished the exams, I was enrolled into a college called "MARA Institute of Technology" in January 1973. Here, 3 of the young lecturers graduated from OHIO University, USA. They thought us Accounting, Economics and Introduction to Business.

When I am almost seating for the 1st semester's examinations, i was offered to enroll at the High School. Immediately after my exams finished, I jumped into the classroom of the High School. Then the results for my 1st semester examinations came out where I was declared as 2ND BEST STUDENT.

NOW! A dilemma; to proceed with my High School or to continue 2ND Semester with the college.

I had to make a very tough decision because I was enrolled in the School of Accountancy. After much deliberation I was persuaded to pursue with the college with the hope of becoming an accountant (very true enough I became a Cost Accountant in 1979 at the age of 24).

The main reasons were because I hate to read and I do not like "writing".

Unfortunately, half of the subjects in every semester requires reading and writing such as Commercial Laws, Company Law, Economics, Business Management and so forth.

Eventually I graduated and started developing my career.

TYPES OF ACCOUNTING

• Financial Accounting is "a major branch of accounting involving the collection, recording and extraction of financial information, and the summary of it in the form of a periodic profit and loss account, a balance sheet and a cash flow statement in accordance with legal, professional, and capital market requirements". Association of Chartered Accountants (ACA) professional graduates best designated as Financial Accountant and upgraded as Finance Manager – Financial Controller.

• Management Accounting is another branch of accounting performed within an organization to provide information only accessible to its decision-makers. Cost accounting falls within this management accounting which normally required by factories or manufacturing concerns. Chartered Institute of Management Accountants professional graduates suitable to undertake as Cost Accountant or Management Accountant or Corporate Accountant.
• Open-book accounting is an accounting principle that aims to improve accounting transparency of organizations. Normally, cooperatives and non-profit organizations such as sports club, cultural groups and charity establishments.
• Tax accounting is the accounting needed to comply with jurisdictional tax regulations. Certified Public Accountants, Chartered Accountants and those qualified Fellowships in the respective fields are best to resume the responsibilities and public trusts as Auditors and Tax Consultants.
• Accounting scholarship is the academic discipline which studies the theory of accountancy.
• Government accounting is a non-profit accounting which uses “public tax payers’ fund” spent in running the states and federal governments.
• Project Accounting is applicable for the nature of works-in-progress where the expected date of completion is determined over a span of time.
• Development Accounting is appropriate for property development such as “housing estates or developers” where completion period for each type of houses is more than 2 years. Some developers divide the land into few phases and varies the type of houses deemed to be constructed.

The related, but separate financial audit comprises internal audit and external audit. External audit - carried out by independent auditors - examines the financial statements and accounting records in order to express an opinion as to the truth and fairness and adherence to Generally Accepted Accounting Principles (GAAP). Commonly used GAAP include the US Financial Accounting Standards Board (FASB), which issues FASB Pronouncements including Statements of Accounting Standards, and the International Accounting Standards Board (IASB), which issues International Financial Reporting Standards (IFRS). Many other countries have instituted local standards resulting in a local country GAAP. Internal audit and/or management audits aim at providing information for management usage, and is typically carried out by employees.