Money industrial blog

In my view, his challenges are because of the following:

a) Incentives and bonuses are based totally on sales volume. This is suitable so long as stringent controls are sufficient to make certain that best genuine income are mentioned. In this example, there have been essential manipulate breakdowns that brought about viable abuses. For instance, a signed settlement to sell and payment of minimum reservation fee (the quantity is handiest equivalent to a fee of buffet lunch for 2 in a five-star inn) were mentioned as income and certified for an incentive. A massive volume of clients who’ve paid reservation charges subsequently defaulted on the primary amortization. Getting an incentive appears to be so smooth!

B) Policies and controls are not enforced and applied. Written regulations, which seem generally sufficient to protect the enterprise from credit losses and abuses, have been omitted. There isn’t any finance characteristic to workout controllership. A essential lapse is that a few buyers have not even submitted key requirements inclusive of proof of earnings (bank declaration/income tax return, certificates of employment) and proof of cope with.
Postdated checks required underneath the Contract to Sell have been now not secured. Some of the shoppers won’t even exist. The quit result become a massive quantity of uncollected receivables from nugatory contracts.

C) Lack of responsibility and ownership. After income had been mentioned and incentives were paid to worried income employees, nobody became liable for the collecting the agreement price.
D) Inadequate finance resources to provide stewardship and controllership.

E) Manual methods and systems.

So how do you prevent the abovementioned problems? A few examples of controls that may be adopted are enumerated underneath:

a) Credit and collection controls. It begins with a strong credit assessment inclusive of requiring all customers to publish a verifiable evidence of profits, capacity to pay (which include certificate of employment, bank bills and income tax go back) and evidence of lifestyles (legitimate identifications). Potential customers will then be assessed for creditworthiness. Can a client pay the contract fee with out the risk of default? If there are large doubts, he may not be the proper customer. B) Controls and applications to enforce integrity, values and responsibility within the organisation. These are enterprise-degree controls to promote, among others, consciousness, enforcement, and tracking of numerous policies inside the organisation. These are not tangible controls but they paintings in harmony with other physical controls to create a balanced and sturdy inner manipulate surroundings. This is a not unusual framework followed by means of massive entities but can be tailor-made to match the wishes of SMEs.