Background of sales department in Bucks Phyz
The staffs of the sales are paid a small basic salary and rest salary is made on the commission of the sales after the invoice of the selling item is created. The head of sales Mr. Barry has commented that Bucks Phyz has introduced a new tool for pricing with which the managers of sales can calculate the price of offers they are giving out. The new tool was capable to have the cost structure, also is capable to calculating the workload that is caused by potential customers and the targets of EBIT are also calculated in the new tool. Bucks Phyz has some policies that the contracts of the offers are to be signed by Barry or by Finance Director Lucida. There had been some cases where the customers had demanded for some changes to the contract draft of the company. This faced a problem in the sales department of Bucks Phyz. When problem arises with the potential customers regarding the contract, an email is sent to the Mary, the AR manager. She investigates creditworthiness of the customer. The finance director Lucida said that there were certain credit check cases in Bucks Phyz with some of the new customers after signing in the contract and after that the invoices are issued.
Internal Control Weakness
A. Risk in Bucks Phyz
B. Impact of the Risk
C. Mitigation process of the Risks
1. The new pricing tool that was implemented by Bucks Phyz was not familiar with all the staff in the sales department. For the old tool that was used in the company, proper training was given to the staffs. But no such training was given when the new tool for pricing was implemented.
As there was no such training held in the company, the staffs in the sales department were not used with the new tool that was implemented by the company. The template of the tool was unknown to the staffs of the sales department. As no training was there, always there is a risk of doing a mistake by the employees of the company and as they are not used to the template, they progress of the work may become slower.
To mitigate the risk of doing the task properly, the employees and the staffs of the company should be given proper training. At the time of joining of a particular staff, training should be given and as the system is new to all the staffs, all the existing staffs should also be trained about how to use the system and how to fill the template. To make the working process of Buck Phyz faster, proper training should be provided to all their employees.
2. There are many standards in the company. But none of the standardization is followed by the employees of the company. None of the staffs follows the standardization process in Bucks Phyz. No standardization process is mapped in the company. There is a contract template that is available in the intranet of the company.
As no such rules, regulations are followed by the company regarding the contract template, the company may face problem in future works. As new employees are hired by Bucks Phyz, and also no such training is provided by the company, there is a high chance of making mistake.
To mitigate this risk, it is suggested to imply the policies and standards strictly in the company. As there is no such strict rules and regulations available, the employees are not bound to follow any kind of template or certain format for the contracts that are held in the company. The standardization process is to be mapped as soon as possible by the company.
3. There is another problem of contract negotiations that are held in the company. There many negotiations that arise in the company from the potential customers. If credit is given to the customers, that is very risky for the company if the customer is not loyal to Bucks Phyz. The credit worthiness of the customers is checked by the AR manager of the company and if the rating is good, then the customer is given credit from the company.
The process of giving credit to the customers after checking their credit worthiness is very risky for the company. The customer can be trust worthy all the time, but if he is untrustworthy a single time, then the company will face a great loss.
To mitigate this risk, the company should first verify the customer before giving them credits. Only the credit worthy customers cannot be trusted to give the credit. Any grading scale cannot define the trust worthy of a customer. The payment method of the company should be improved and not get neglected by the managers and the fianc? director of the company.
Implementing credit cards in Bucks Phyz.
Benefits of using credit cards in Bucks Phyz
There are many advantages of using business credits cards. If Bucks Phyz uses credit cards, there are many advantages. First of all the credit cards that can be used instead of giving line of credits to the customers. The line of credits has a fixed rate of interest but the credits cards that are issued by the company have a revolving line of credit. In credit cards, the user must repay the monthly bill while using the credit card which is not exactly the same case in line of credit. There is another advantage of using the credit card is the amount of interest that is imposed on the card. Small business like Bucks Phyz has some fixed amount of loan or some fixed line of credits which results in large amount of financing for the company. The credit that is given by Bucks Phyz has very low cost of interest. The credit cards have easier qualification which helps the business owners to do well in the credit history. Credit cards are much more convenient in the financing sector of the Bucks Phyz. The managers of the Bucks Phyz can have an easy look on the funds of the company. There are higher credit limits in the credit cards that are used by the company.
Disadvantages of using Credit cards
As there are advantages of using credit cards, there are many disadvantages of using the credit cards in Bucks Phyz. Using the credit card in the company increases the cost of expenses in the company. Small businesses like Bucks Phyz finds difficult to invest such a huge amount of money on credit cards for their customers. There has to be a personal legal liability of the credit card that is used by the Bucks Phyz so that the customers who are given the credit are able to repay their debts. If the customer does not repay their debts, they will have negative credit report and will be considered as unable to borrow money from the company. The credit cards that will be used by the company have less protection than the credit cards of the customers. Same level of services is provided by many cards which make the cards less protected. The fluctuating rate of credit cards is also a disadvantage for the company because they always have to update their data of each customer which is an extra burden for Bucks Phyz.
Recommendation for CEO
The CEO is recommended to imply credit cards in the company to impose a proper guideline and regulation to their customers. Trustworthy of the customer is checked before allowing credit to the customer. But if credit card is implemented, the company will not have to check the trust worthiness of the customer before applying credit.
The company of Bucks Phyz has many issues in their sales department which mainly have to be resolved. The company of Bucks Phyz issues problem while giving credits to their customers. They have to go through different procedures of checking whether the customer is loyal or not. By implementing the process of credit cards, they can mitigate such process of insecurity in the company
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