Just Identify 5 weaknesses instead of 10 if possible.
1. Based on the notes (i.e., narrative), list 10 weaknesses in the revenue cycle. At least one weakness must come from each area (general notes, marketing and sales, shipping, business office, accounting, IT). For each weakness, identify why it is a weakness/what could go wrong, and then suggest a control to mitigate the weakness. General notes TechWear has some very aggressive growth goals (targeting $38 million in global sales for calendar year 2016). The excitement on social media has been very encouraging, resulting in very positive trends in the number and size of orders from existing customers, as well as some prominent new customers. Sales personnel are under a significant amount of pressure to meet their monthly targets. The production department is barely able to keep up with the orders. Some have expressed concern that product quality may be impacted in the future unless changes are made to improve the manufacturing infrastructure. Management is planning a major renovation in early 2017 that will greatly expand its production capacity. One individual involved with R&D expressed concern that the product may not function as designed in some less technologically developed environments with sporadic connectivity and slower transmission speeds. Like many start-up companies, TechWear has operated with a very limited staff, resulting in an inadequate segregation of duties. At least two key employees are related, including the Director of IT and a top sales representative. Director of Marketing and Sales The Director oversees a small team of salespeople that market TechWear's products to distribution outlets. An order cannot be entered into the system unless the customer has been set up in the customer master file, which reflects data such as the customer's name, identification number (assigned by TechWear) billing information and credit limits. Historically, the process to set up a new customer involved running an extensive background and credit check, which could take up to 30 days. However, due to complaints from sales personnel, management decided to create a "provisional status" that would enable immediate order fulfillment while the credit check is in process. TechWear uses an order-entry system that enables sales personnel to generate an order. Once an order is entered, the system automatically generates a shipping order that appears on the shipping department's order fulfillment log. Shipping Supervisor Tech Wear's goal is to fulfill an order within 24 hours of its receipt. Orders entered near the end of the day (after the FedEx pickup time) are marked as "pending" and cleared out the following business day. At the time of shipment, TechWear's shipping clerk enters the shipping number into the system and the FedEx identification number (all shipments for the same day have the same FedEx identification number), which then releases the order, resulting in the sales transaction being posted (with a transaction number that matches the shipping number) and an invoice being generated. The invoice is sent either electronically or via mail to the customer. At the same time, the cost of inventory relieved for items sold is automatically generated and recorded based on the shipping number. Typically, the cost of sales ranges between 35% and 45%. 1. Based on the notes (i.e., narrative), list 10 weaknesses in the revenue cycle. At least one weakness must come from each area (general notes, marketing and sales, shipping, business office, accounting, IT). For each weakness, identify why it is a weakness/what could go wrong, and then suggest a control to mitigate the weakness. General notes TechWear has some very aggressive growth goals (targeting $38 million in global sales for calendar year 2016). The excitement on social media has been very encouraging, resulting in very positive trends in the number and size of orders from existing customers, as well as some prominent new customers. Sales personnel are under a significant amount of pressure to meet their monthly targets. The production department is barely able to keep up with the orders. Some have expressed concern that product quality may be impacted in the future unless changes are made to improve the manufacturing infrastructure. Management is planning a major renovation in early 2017 that will greatly expand its production capacity. One individual involved with R&D expressed concern that the product may not function as designed in some less technologically developed environments with sporadic connectivity and slower transmission speeds. Like many start-up companies, TechWear has operated with a very limited staff, resulting in an inadequate segregation of duties. At least two key employees are related, including the Director of IT and a top sales representative. Director of Marketing and Sales The Director oversees a small team of salespeople that market TechWear's products to distribution outlets. An order cannot be entered into the system unless the customer has been set up in the customer master file, which reflects data such as the customer's name, identification number (assigned by TechWear) billing information and credit limits. Historically, the process to set up a new customer involved running an extensive background and credit check, which could take up to 30 days. However, due to complaints from sales personnel, management decided to create a "provisional status" that would enable immediate order fulfillment while the credit check is in process. TechWear uses an order-entry system that enables sales personnel to generate an order. Once an order is entered, the system automatically generates a shipping order that appears on the shipping department's order fulfillment log. Shipping Supervisor Tech Wear's goal is to fulfill an order within 24 hours of its receipt. Orders entered near the end of the day (after the FedEx pickup time) are marked as "pending" and cleared out the following business day. At the time of shipment, TechWear's shipping clerk enters the shipping number into the system and the FedEx identification number (all shipments for the same day have the same FedEx identification number), which then releases the order, resulting in the sales transaction being posted (with a transaction number that matches the shipping number) and an invoice being generated. The invoice is sent either electronically or via mail to the customer. At the same time, the cost of inventory relieved for items sold is automatically generated and recorded based on the shipping number. Typically, the cost of sales ranges between 35% and 45%
