AR Database Cleansing Process

Customer Master Database Cleansing

The Who, What, When, Where, How and Why of an Efficient Process

Presented by:

Cheryl Clancy CAPP BBA MSA

GT Technologies, Westland, Michigan


What Will Be Covered

– Assigning ownership to a department for the Customer Master Database

– Assigning team members to the maintenance of the Customer Master Database

– Designing a list of data points that should be included in the database and updated regularly

– Scheduling and developing routine cleansing dates

– Develop naming convention to be used with consistency

– Designing best practice procedure for cleansing the database (internal or external to the system)

– Designing and communicating work papers to add or change customer data to the system in a consistent manner

– The benefits of a clean customer master database


Polling Question 1:

Who is responsible for the Customer Master Database Maintenance in your organization?

– Information Technology/Management Information– Finance– Sales or Purchasing– Accounting-Accounts Receivable– There is no set department, many individuals have access


Who

Who owns the Customer Master Database?

• Information Technology - may own the system since it is part of the network and it is a management tool that is connected to other vital groups and includes detailed information

• Finance – may own the database when this group is responsible for multiple functions such as owning other databases, such as HR

• Sales or Purchasing – may own the database since they feel the detail of the customer base is their responsibility since they may also handle the supplier data base and one employee updates both databases. A customer may also be a supplier

• Accounting - Accounts Receivable – may own the database since they feel it is a cash based program

• No one – there is no formal responsibility level and all departments may have access to update the database when necessary


Who

Who Has Access?

– What is the optimum number of employees that have access to update the customer database?

• Optimum number based on experience is two, one main contact and one backup.

• Each individual should have their own sign on information and should not share passwords

• All changes and additions to the database would pass through a work flow process to the administrators of the program

Who

Access Options

– The database can have access created for:

• View Only (no changes can be made to the database)

– Access would be granted to anyone who requests the database with a reasonable need

• Edit and View (changes can be made to the database or the database would appear as a view only)

– Access for the two owners of the database


What

What is the Customers Database used for?

– The Customer Master Database holds the customers information. All the detailed information on the customer can be included in the database.

– Additional required information can be added to the database at any time

– The database will contain information such as

• Contact Information

• Shipping Information

• Credit Information

• Tax Information

• Banking information (method of payment)


What

The Customer Database may include

– Contact Information• Customer mailing address

– Bill To - where invoices will be sent– Ship To – where shipment will be made– Shared Service - customer service location

• Customer address for ERS invoicing– Shipment Information

• Shipment method• Accounts receivable account number• Currency• Language• Plant site• Taxable pricing• Applicable discounts• Pricing table


What

The Customer Database may include, continued

– Credit Information• Credit limit• Credit terms• Credit hold status• Credit rating• Dun and Bradstreet number• PO required status• Finance charge• Discounts offered• Statement issued (yes or no)• Last payment date• Last credit review date and/or high credit date• High sale date and/or last sale date


What


– Tax Information

• Taxable information

• PST or GST taxable

• State tax code

• Tax Identification Number

– Bank Information

• Customer payment method

– Check

– Electronic

» Wire – international payments

» ACH – US payments


What


– Customer contact information• Accounts Payable

– Phone number– Fax number– Email address

• Buyer– Phone number– Fax number– Email address

– Customer 1099 information– Pricing tables– Currency– Sales Person


What

– If there are fields in the Customer Database that are not necessary for your needs, those fields can be renamed or used for other details that would provide more benefit. Check with your programmer for options.


Polling Question 2:

When does your organization cleanse the Customer Master Database?

– Annually– Every 6 months– Quarterly– Never– Not Sure


When

When should the Customer Master Database be cleansed?

– The Customer Master Database should be cleansed at least annually

– If the database is extremely large, break up the database into sections and each month or quarter complete a partial cleansing, so within a years time all the data has been reviewed once

– Some organizations may run a quarterly or semi-annual review depending on the size of the database.

– A review of the database in many cases is an audit issue, so a mandatory review would be conducted during any internal or external audit.

• Best practice would suggest that prior to an audit, the database should be cleansed. Having an audit note regarding a negative message on the database may not be acceptable in some organizations.


When

When should the database be updated with new customers or changes?

– The Customer Master Database should be updated with new customers or changes to customers account on a regular pre-determined basis

• A schedule should be set into place that confirms that all changes will be made within a specific period of time (for example: within 1 business day or 2 business days)

– Communicate planned update schedule for all requests

• Internal customers should be aware of the schedule for additions and updates to the customer database for planning purposes


When

For new customers or data updates what type of approval is required?

When a customer needs to be added or updated into the database, a uniform request form should be used (see copy attached)

Appropriate signatures would be required to set up a new customer or make changes to the customer account

– Approval from sales and finance may be required on the request form

– Approval from the requestor, with signature confirming the data is accurate

The requestor should not be the same person that is creating the customer in the database

– Due to conflict of interest and possibility of fraud (shipping product to a non-existent company for example)


When

For new customers, what information is needed and what is the process?

– The customer would submit a W9 with their request

– A Dun and Bradstreet report may be run on the customer– A credit reference package would be completed (for customers who will be

requiring credit)

– If your corporation sells product that may be used by terrorists, the new customers information may be run through the US Terrorism List of companies (to ensure your organization is not selling to a targeted organization)


Where

Where does the Customer Master Database reside?

• The customer database will reside in the corporate software package usually used by the main or largest system that is in operation

• Locations may have access as a view only or an edit/view ability

• Locations that use independent financial databases such as QAD at one location and SAP at another location, will each have there own customer master database to maintain

• Multiple locations can share the customer database if they are on the same financial system


Where

Where is the database cleansed?

• A database can be cleansed inside the software base or exported out to excel (in many instances) and the uploaded back into the corporate software after cleansing

How

Steps to a Clean Database

• Confirm what data is required to be registered in the database

• Confirm how purchase history will relate to active customer status

• Design a naming convention• Download the database (to a workable format)

• Cleanse the database

• Reload the database

How

Confirm what data is required in the database

• What information must be added to or included in the database (such as)

» Tax information » Credit levels» Billing address

• What information should be removed from the database

• What sections will be renamed and filled with new information

How

Define the historical sales date range for active customers

– Choose a period of time to inactivate customers

» Customers that have not purchased for a specific period of time such as 12 months or 18 months (decide what that time frame is acceptable) for inactivation

– Design a parameter to inactivate customer accounts

» Create a plan to delete or code all customers into a specific category of “do not use” or code as “hold” or “inactive”

– This method will require future sales to be reviewed for accuracy regarding their database prior to shipment


How

Design the Naming Convention

» Choose lettering» Choose abbreviations» Choose state and zip method


How

Choose the Naming Convention – Lettering

• Lettering (be consistent)

– Use all capital letters

– Capitalize the first letter each word Customer Name


How

Choose the Naming Convention – Abbreviations

• Abbreviations for Company– Incorporated - shown as INC.– Corporation – shown as CORP.– Company – shown as CO.

• Addresses– Street - ST– Number street – shown as 1st, 2nd, 3rd as numeric numbers,

not written out– Court - CT– Avenue - AVE– Boulevard - BLVD– Road – RD

• Please see attached USPS document with more details


How

Choose the Naming Convention – State and Zip

– State Name• Use the two alpha code for each state – MI-Michigan, OH-Ohio, etc• Locate the state codes on www.usps.com (or see the attached document)

– Zip Code• Use the 5+4 digit zip code method for faster processing 48239-1452, etc

• Locate correct zip code information on www.usps.com – zip code look


How

Download and Cleanse

– Download the database

– Sort the database

– Create excel programs to locate duplicates

– Cleanse the data based on information required in the file (add, remove or delete information based on the pre-designed format)

– Cleanse the data based on naming convention

– Delete duplicate accounts

– Delete customers that are no longer active (based on pre-defined historical sales information)

– Load the data file into the system


How

Download

– Download the database from each system or location to a common workable database such as excel

• Bring forth the entire customer file including (details such as)

– Name

– Address

– Buyer information

– Bank information

– Contact information

• If combining the databases are too large for excel, cleanse the databases for each location individually, then review manually


How

Create a database in excel for sorting and reviewing

– Complete the download of the database

• Add a column for each location (if one is not noted) in terms of which location owns this database for example, Plant 1, Plant 2, etc.

• Continue to add the next database to the worksheet, and so on, until all locations are entered into the group database in excel

– Sort the database by customer name

• Sorting allows easy identification of same customer names and missing data


How

Cleanse

– Create excel programs to locate duplicates (see IT if you need assistance)

• Delete duplicate customers – keep track of old account numbers to new account numbers

– Cleanse the data

• Cleanse the data based on naming convention

– Correct information to conform to naming convention rules

• Inactivate customers without a current purchasing history

• Enter missing data that is required in the database

• Enter new customers

– Review for any inaccuracies

– Load the database into the system


WHY

Reasons Why the Customer Master Database Needs to be Cleansed

– Databases were previously residing under different software or systems and now are being merged to one database

– Divisions or locations are purchased and new customers need to be added or downloaded into a single database

– Divisions or locations are sold and customers need to be deleted from the current database

– Databases were merged in the past without cleansing, therefore the database has multiple customer accounts listed and requires cleansing

– Different methods of entering data were used in the past, whereas a naming convention was not in place, and now multiple customer accounts exist and need to be cleansed

– Additional information is now required to be entered in the customer account

– Inactive customers need to be coded

Benefits of a clean database:

– Invoices are sent to the correct address

• Reduces delay in payment

– Collection efforts will be more efficient

• Ensures accuracy of credit terms and credit levels

– Reduced chance of choosing the wrong ship to location if customers with multiple addresses are cleansed

– Database size is reduced, saving space and cost

– Clean databases are easier to manage and maintain on a consistent basis


Summary

– Assign 1 department to oversee the Customer Master Database

– Assign 2 people to the maintenance of the Customer Master Database

– Schedule routine cleansing dates

– Develop naming convention to be used with consistency

– Develop a time line for inactivating customers

– Design best practice procedure for cleansing the database (internal or external to the system)

– Design and communicate work papers to add or change customer data to the system in a consistent manner

– Design a list of data points that should be included in the database and updated regularly

– Scheduling and developing routine cleansing dates


Questions?

Thank you for attending!

Documents

AR Database Cleansing Process