Minimise the growing level of bad debts

You have recently been appointed by the management board of JKL Ltd, a small electrical accessories company, to design a company-wide computer-based sales/debtors system. To date, the company has maintained a manual record system for its sales/debtors.

For the previous three financial year the company has had an average annual turnover of £18m (all sales are in the UK), and average annual profits of approximately £4.4m. The company has approximately 50 employees working at six locations throughout the UK: Manchester, which is the company’s head office, Birmingham, Leeds, Swindon, Bristol and Newcastle. In Manchester, five staff are directly involved in sales/debtors system, whereas in the remaining five locations only 10 members of staff are directly involved – two at each regional location.

For the year ended 31 January 2007, approximately 95% of the company’s sales were trade sales to UK retail companies, of which 88% of these sales were on credit. In addition, for the past three financial years, bad debts relating to trade sales have averaged approximately 5% of the company’s turnover in each year, resulting in lost income over the three years of approximately £2.7m. It is this loss of sales income that has prompted the management board of the company to review its sales/debtors system.

The company purchases all its retail stock


Making whatever assumptions you consider necessary, prepare a draft design for the management board of JKL Ltd indicating, where appropriate, the necessary control procedures you recommend in order to minimise the growing level of bad debts.


Looking for help with your homework?
Grab a 30% Discount and Get your paper done!

30% OFF
Turnitin Report
Title Page
Place an Order

Calculate your paper price
Pages (550 words)
Approximate price: -