Assume that a customer comes to Sightscan and asks the company to develop an imaging application that will capture student signatures as they sign-in to class. The software then matches the signature to a database to verify the signatures. The project involves both a hardware (image capture signature pad, like grocery stores use to capture signatures for credit card purchases) and a software development piece (the code to make the hardware perform and interact with the company's student signature database).
a. The system automatically checks the customer's credit limit and finds it acceptable. The order is placed in the ERP system for the project.
b. The system schedules the development of the software by assigning a timeline and allocating personnel to the project. The development will take 3 weeks.
c. The system places an order for the hardware with their supplier.
d. The hardware is received and stored.
e. Each week the project manager reports time spent on the software development to the accounting manager. Revenue is recognized under the percentage of completion method.
f. The installation of hardware and software are completed on the first day of the month over a two-day visit to the customer site.
g. At the end of the month accounting sends an invoice for hardware and software.
h. The customer pays one month later.
For each of the events presented above, provide the following (a table may be helpful)
1. list the information that must/will be recorded in the ERP system,
2. the modules that will be involved in recording the event,
3. the impact on company wealth
4. what the company's obligations are as a result of the transaction
5. what any outsider obligations are as a result of the transaction
6. whether the event results in a an cash inflow or outflow (indicate which, or none)
Finally, comment on how the company might improve its cash conversions cycle.