Male Only Fashion Case Summary

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A thorough review of the current internal control policies and procedures of Male Only Fashion was recently conducted. The aim of this memorandum is to outline the current issues of cash, credit and inventories provide to Mr Perry with logical solutions and recommendations for the necessary improvements to existing policies and procedures. This information was gathered by an observation of all about Male Only Fashion to introduce new system of policies and procedures to ensure the continuity of a successful business. There are a few issues with Male Only Fashion business’s procedure for cash. First of all, Mr Perry leaves all responsibilities for the day-to-day operations for Ralph Lauren to manage. The problem of here is that only Mr Lauren…show more content…
The business has extended a line of credit to customers as Mr Perry trusts that they will eventually pay their accounts because they have completed an “Application for Credit” from. According to Male Only Fashion Aged Analysis of Accounts Receivable, a few regular customers are at risk of becoming a bad debt. In the report for Male Only Fashion, a high percentage (40%) of amounts owned are 61-90 days overdue. This means that these amounts of money have been outstanding for up to 90 days. This procedure can be an issue for the business, if failure to build a credit relationship with customers could result in a significant loss of business income. Many businesses fail when they have unpaid debt for long periods, could have a devastating effect on business’s cashflow. A recommendation for this situation is the business must take action to follow up on these overdue accounts. The type of action to be taken would be outlined in the business’s credit policy need to develop. It is very important that every business setting a comprehensive credit policy procedure. This policy must include ascertaining customer creditworthiness and establishing credit limits, payment terms, discounts offered, fees for late payment and action to be taken for overdue accounts. This control will help the business to minimise the overdue accounts and future bad debts. This solution of controlling overdue…show more content…
This practice can be an issue for the business because inventories can be lost through unsuitable storage conditions or losses through theft. These excess stocks become spoiled and either cannot be sold or may be sold at considerable discount that results in decreased profit for Male Only Fashion. Introducing a new system of control over storage will increase the business’s opportunity to make a more profit effectively. These controls are generally performed over location, security and turnover. Excess inventories should be store in the warehouse where readily accessible at any time by staff to handle them. The warehouse must be locked and only authorised personnel should have access to the keys. In a retail store, it has been observed that the recording equipment in two stores was not working. For all organisation, especially small business, losses through theft can amount to a sizeable and unwanted expense. As a measure against pilfering by staff or shoplifting by customers, your business should fix the recording camera as soon as possible. If these controls are effective, it will help the business for management of inventories to have beneficial sales. Inventories should be turned over as quickly as possible. This faster the rate of turnover (sales), the greater the opportunity to make profits for your business with
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