1 00:00:14,480 --> 00:00:18,822 Hello, I’m Seungjoo Hwang from the Finance & Accounting Team, 2 00:00:19,060 --> 00:00:22,944 and I’ll be delivering the final part of the SERVEONE MRO Process Course on Debt and Credit Management 3 00:00:24,063 --> 00:00:26,397 I’ll explain the process of managing accounts receivable generated from sales settlement, 4 00:00:26,714 --> 00:00:29,607 accounts payable generated from purchase settlement, 5 00:00:30,116 --> 00:00:31,484 as well as credit management for client companies 6 00:00:31,820 --> 00:00:35,377 and SERVEONE’s process for handling debt payments 7 00:00:38,560 --> 00:00:44,347 The lecture will proceed in Debt Management, Payment Management, Credit Management, and Credit Control order 8 00:00:47,439 --> 00:00:49,958 Before we begin, let me briefly introduce myself 9 00:00:50,532 --> 00:00:53,903 I joined SERVEONE in 2022 as an experienced hire 10 00:00:54,279 --> 00:00:57,828 Before that, I worked at LG CNS for nearly ten years 11 00:00:58,759 --> 00:01:02,188 I left the company to focus on childcare, so there was quite a long career gap 12 00:01:02,653 --> 00:01:04,749 Fortunately, I had the opportunity to join SERVEONE, 13 00:01:05,303 --> 00:01:08,539 and now that my daughter is in high school, I’d say I’m about halfway graduated from parenting 14 00:01:09,400 --> 00:01:12,450 This photo was taken when I went to Universal Studios Japan with my daughter 15 00:01:12,727 --> 00:01:15,817 We wore her Harry Potter uniform from morning till night, 16 00:01:16,074 --> 00:01:20,807 and we took this favorite photo in the same spot, once during the day and once at night 17 00:01:21,639 --> 00:01:24,804 Because I had her early and raised her early, she now feels more like a friend, and life has become much easier 18 00:01:25,794 --> 00:01:27,484 Let’s begin the lecture 19 00:01:28,959 --> 00:01:30,939 The first topic is Debt Management 20 00:01:32,879 --> 00:01:36,389 At SERVEONE, which distributes goods, sales and purchase settlements 21 00:01:36,389 --> 00:01:38,469 occur according to the flow of inventory 22 00:01:38,889 --> 00:01:41,069 From these, accounts receivable arise for the sales settlement amount, 23 00:01:41,269 --> 00:01:44,039 and accounts payable arise for the purchase settlement amount 24 00:01:44,959 --> 00:01:47,199 As you learned in the Settlement section earlier, 25 00:01:47,419 --> 00:01:49,669 the timing of SERVEONE’s purchase settlement 26 00:01:49,669 --> 00:01:52,359 is recognized differently depending on the delivery type 27 00:01:52,779 --> 00:01:56,399 At the moment purchase settlement takes place, the goods are recognized as SERVEONE’s inventory, 28 00:01:56,559 --> 00:02:01,549 and an amount payable to the supplier is created, which is scheduled for monthly payment by supplier 29 00:02:02,709 --> 00:02:06,279 Let me briefly explain the journal entries related to purchase settlement 30 00:02:06,489 --> 00:02:09,779 At the point of goods receipt or delivery completion, 31 00:02:09,779 --> 00:02:12,979 an entry is recorded with Inventory and GRIR 32 00:02:12,979 --> 00:02:15,869 which is a temporary account used in SAP 33 00:02:16,269 --> 00:02:19,109 This reflects the increase in inventory assets 34 00:02:19,449 --> 00:02:22,199 At the point of purchase settlement, the entry is made with GRIR 35 00:02:22,339 --> 00:02:27,089 and AP, where AP stands for Accounts Payable 36 00:02:28,149 --> 00:02:32,920 GRIR, short for Goods Received/Invoice Received, is only a temporary account 37 00:02:33,360 --> 00:02:36,420 Once settlement occurs after receipt 38 00:02:36,420 --> 00:02:38,920 the debit and credit entries offset each other, and disappears 39 00:02:40,160 --> 00:02:42,780 For reference, when sales settlement takes place, 40 00:02:42,860 --> 00:02:45,110 the goods are recorded on the credit side as they leave inventory, 41 00:02:45,110 --> 00:02:50,379 and they are recognized as Cost of Goods Sold 42 00:02:50,379 --> 00:02:54,869 and an Account Receivable (AR) is generated for that sales value 43 00:02:55,349 --> 00:02:58,120 I’ll explain this part in more detail later 44 00:02:58,960 --> 00:03:00,860 Here is the purchase settlement schedule 45 00:03:01,360 --> 00:03:04,550 For all deliveries completed from the 1st to the last day of the month, 46 00:03:04,770 --> 00:03:08,339 tax invoices are collectively reverse-issued on the second business day of the following month 47 00:03:09,119 --> 00:03:12,449 By principle, a tax invoice must be issued by the supplier 48 00:03:12,809 --> 00:03:15,159 When the seller issues it, it is called a normal issuance 49 00:03:15,419 --> 00:03:17,349 But in this case, the buyer, 50 00:03:17,549 --> 00:03:20,739 SERVEONE, issues it, so it is called a reverse issuance 51 00:03:21,759 --> 00:03:25,909 Normal electronic tax invoices are automatically reported to the National Tax Service 52 00:03:26,329 --> 00:03:29,439 For reverse-issued invoices, however, the supplier, 53 00:03:29,759 --> 00:03:33,099 the party receiving the invoice, must approve it before it is reported 54 00:03:34,399 --> 00:03:39,199 By principle, if we relied on normal issuance, 55 00:03:39,399 --> 00:03:43,479 we would have to manually monitor every case where a supplier either failed to issue an invoice 56 00:03:44,080 --> 00:03:47,430 To prevent this, SERVEONE automatically pulls delivery-completed data from the system 57 00:03:47,550 --> 00:03:50,550 and issues reverse tax invoices on behalf of suppliers 58 00:03:50,890 --> 00:03:54,510 We then remind them to approve these invoices by the statutory deadline, 59 00:03:54,510 --> 00:03:55,920 the 10th of the following month, as required by VAT law 60 00:03:57,360 --> 00:04:01,950 For invoices that have been approved, promissory notes are issued on the regular payment dates, 61 00:04:02,030 --> 00:04:03,340 the 13th or the 30th 62 00:04:04,880 --> 00:04:08,830 Purchase carryover can be processed if a supplier mistakenly marks a delivery as complete, 63 00:04:09,050 --> 00:04:12,119 as long as the correction request is made by the first business day 64 00:04:12,759 --> 00:04:15,359 Settlement adjustment means that if the accounting month recorded in the financial statements 65 00:04:15,359 --> 00:04:19,139 differs from the month of the tax invoice, 66 00:04:19,499 --> 00:04:22,279 the accounting is aligned to match the tax reporting standard 67 00:04:23,079 --> 00:04:26,139 Cases like missed delivery completion, missed hub receiving, 68 00:04:26,639 --> 00:04:30,779 or a return sales settlement overlooked by the operations manager can all cause issues 69 00:04:31,319 --> 00:04:34,829 If a return occurs but the return sales settlement is not processed, 70 00:04:35,109 --> 00:04:37,559 then the return purchase settlement cannot be carried out 71 00:04:37,859 --> 00:04:39,719 This, in turn, becomes a reason for a settlement adjustment 72 00:04:41,119 --> 00:04:44,659 For example, let’s say the purchase record in January is 110, 73 00:04:45,019 --> 00:04:48,499 and in February a return settlement of –10 is recorded 74 00:04:48,959 --> 00:04:52,439 In reality, that return actually happened in January, 75 00:04:52,799 --> 00:04:55,349 but because the return sales settlement was missed in January, 76 00:04:55,349 --> 00:04:58,920 the return purchase settlement was also processed in February 77 00:04:59,200 --> 00:05:02,420 In this case, the actual purchase tax invoice should have been 100 78 00:05:03,440 --> 00:05:06,000 So, through a settlement adjustment, the February accounting record of 79 00:05:06,140 --> 00:05:10,290 –10 is reassigned to January for tax documentation, 80 00:05:10,550 --> 00:05:12,919 ensuring the VAT attribution is correctly applied to January 81 00:05:13,519 --> 00:05:17,159 Some of you may be curious about purchase accounting entries, 82 00:05:17,239 --> 00:05:18,920 so let me briefly explain 83 00:05:19,480 --> 00:05:22,660 When goods are purchased and payment is made, 84 00:05:23,000 --> 00:05:26,919 the final journal entry records inventory assets on the debit side, 85 00:05:27,659 --> 00:05:29,659 input VAT also on the debit side, 86 00:05:30,619 --> 00:05:33,359 and a reduction of cash assets on the credit side 87 00:05:33,499 --> 00:05:35,199 This happens 88 00:05:35,679 --> 00:05:39,599 At SERVEONE, accounting journal entries are generated at each stage of the process 89 00:05:40,539 --> 00:05:44,080 When goods are received, inventory assets increase on the debit side, 90 00:05:44,820 --> 00:05:48,880 and a temporary account called GRIR is recorded on the credit side 91 00:05:49,360 --> 00:05:51,760 At the time of purchase settlement, the system recognizes, 92 00:05:52,340 --> 00:05:57,100 “Now we owe the supplier money,” so Accounts Payable (AP) is posted on the credit side, 93 00:05:57,440 --> 00:06:01,670 and the GRIR temporary account is reversed on the debit side 94 00:06:02,630 --> 00:06:07,040 This way, the GRIR account is offset and cleared out 95 00:06:08,799 --> 00:06:12,729 For each order, purchase settlement entries are created, 96 00:06:12,729 --> 00:06:14,549 and these are then summed up monthly 97 00:06:14,769 --> 00:06:17,839 when issuing a tax invoice 98 00:06:18,139 --> 00:06:19,289 For example, if settlements 99 00:06:19,989 --> 00:06:24,159 occur as 10, 20, and 30, 100 00:06:24,339 --> 00:06:26,439 the total is 100 101 00:06:26,799 --> 00:06:30,019 The tax invoice is issued for 100, 102 00:06:30,279 --> 00:06:34,119 and payment is made including VAT, so 110 in total 103 00:06:34,839 --> 00:06:38,779 At this stage, the Accounts Payable generated when processing the tax invoice 104 00:06:39,059 --> 00:06:41,069 becomes the actual liability to be paid 105 00:06:41,669 --> 00:06:45,339 The debit-posted temporary purchase account 106 00:06:45,799 --> 00:06:49,939 is offset against the AP from the purchase settlement entries 107 00:06:53,600 --> 00:06:59,110 That’s the overall flow 108 00:07:00,010 --> 00:07:03,439 When the actual payment is made, 109 00:07:04,359 --> 00:07:08,359 the payment entry is cleared, and cash is disbursed 110 00:07:09,099 --> 00:07:12,009 At the time the tax invoice is processed, 111 00:07:12,189 --> 00:07:15,349 the debit side records Input VAT 112 00:07:15,609 --> 00:07:18,579 which later becomes the basis for the quarterly VAT filing 113 00:07:20,480 --> 00:07:23,680 In addition to liabilities created from normal product purchases, 114 00:07:23,980 --> 00:07:26,560 there can also be deficit-related liabilities or seized liabilities 115 00:07:27,480 --> 00:07:30,120 A deficit liability refers to 116 00:07:30,120 --> 00:07:32,510 a negative tax invoice issued due to purchase returns 117 00:07:33,010 --> 00:07:37,139 In practice, this becomes a receivable from the supplier, money the supplier owes back 118 00:07:37,359 --> 00:07:39,869 Since many suppliers are relatively small businesses, 119 00:07:40,129 --> 00:07:41,979 special attention is required to ensure collection, 120 00:07:42,539 --> 00:07:45,000 as there is always a risk of uncollected receivables 121 00:07:46,000 --> 00:07:48,960 A seized liability occurs when a supplier’s assets are legally seized 122 00:07:49,020 --> 00:07:53,839 If a creditor files a lawsuit 123 00:07:53,919 --> 00:07:59,099 and the supplier’s assets are seized, 124 00:07:59,219 --> 00:08:02,639 the court will notify SERVEONE 125 00:08:03,559 --> 00:08:06,459 If SERVEONE were to pay the supplier despite the seizure, 126 00:08:06,719 --> 00:08:11,180 the payment would be invalid, creating a risk of double repayment 127 00:08:12,000 --> 00:08:15,140 Therefore, when seizure documents arrive by mail, 128 00:08:15,440 --> 00:08:17,240 SERVEONE registers them in the legal portal, 129 00:08:17,560 --> 00:08:19,840 and all liabilities to the supplier are 130 00:08:19,840 --> 00:08:22,440 withheld until the seized amount is fully settled 131 00:08:23,640 --> 00:08:27,340 When a seizure occurs, the debtor is the supplier who owes money to the creditor, 132 00:08:27,640 --> 00:08:32,180 and SERVEONE becomes the third-party debtor 133 00:08:33,200 --> 00:08:38,340 The seizure notice means: “Do not pay the supplier” 134 00:08:38,820 --> 00:08:43,680 The collection order means: “By law, pay the creditor instead” 135 00:08:44,640 --> 00:08:48,279 If the creditor is unknown, SERVEONE may deposit the funds with the court 136 00:08:49,039 --> 00:08:53,439 In cases where the seizure is due to unpaid taxes, once the tax office issues a release notice, 137 00:08:53,559 --> 00:08:56,480 SERVEONE lifts the payment hold and pays the supplier 138 00:08:57,640 --> 00:09:01,300 Here’s an explanation of VAT: Taxable, Zero-rated, and Exempt 139 00:09:02,320 --> 00:09:05,050 Most transactions are taxable 140 00:09:05,570 --> 00:09:08,610 Zero-rated VAT applies to cases such as 141 00:09:08,610 --> 00:09:11,599 direct exports or local exports, where foreign currency is earned 142 00:09:12,039 --> 00:09:14,349 A zero rate means the tax rate is 0%, 143 00:09:14,609 --> 00:09:16,799 and this classification depends on the distribution channel 144 00:09:17,719 --> 00:09:20,579 In the S-MRO system, when checking the operating unit, 145 00:09:20,699 --> 00:09:24,760 if the distribution channel is set to Local Export or Direct Export 146 00:09:25,880 --> 00:09:28,840 Since foreign-currency earning transactions fall under the zero-rated category, 147 00:09:28,980 --> 00:09:32,780 if the sales settlement is zero-rated, then the purchase settlement must also be zero-rated 148 00:09:33,320 --> 00:09:37,280 To qualify, you need export documentation such as a Purchase Confirmation, 149 00:09:37,280 --> 00:09:39,520 a Domestic Letter of Credit, or an Export Declaration Certificate 150 00:09:40,280 --> 00:09:44,959 These export-related documents are issued by the Accounting Department’s import/export team 151 00:09:46,760 --> 00:09:49,470 VAT-exempt means the transaction is entirely outside the scope of VAT 152 00:09:49,670 --> 00:09:52,940 The VAT Act specifies which goods and services qualify 153 00:09:53,280 --> 00:09:55,520 At SERVEONE, common VAT-exempt items include 154 00:09:55,660 --> 00:09:58,419 laboratory mice, though imports are taxable 155 00:09:58,979 --> 00:10:04,289 Or plants and floral arrangements, items sold via e-commerce malls like V-Members, 156 00:10:04,509 --> 00:10:08,539 meat, diapers, good supplied to non-taxable organizations 157 00:10:08,539 --> 00:10:12,139 such as welfare foundations for the disables 158 00:10:13,359 --> 00:10:17,339 Under the VAT Act, a tax invoice must be issued 159 00:10:17,559 --> 00:10:19,379 and payment made at the time goods are supplied 160 00:10:19,779 --> 00:10:23,979 However, in some cases payments are split into 161 00:10:23,979 --> 00:10:26,059 advance payments, progress payments, and final payments 162 00:10:26,919 --> 00:10:29,999 The VAT Act allows this under the conditional installment payment rule, 163 00:10:30,599 --> 00:10:32,919 which recognizes the issuance of tax invoices 164 00:10:32,919 --> 00:10:36,420 at each stage of payment 165 00:10:36,960 --> 00:10:41,300 This approach is typically used for large-scale transactions such as equipment or machinery, 166 00:10:41,800 --> 00:10:44,099 and it must be reviewed from the contract stage 167 00:10:45,099 --> 00:10:47,939 Currently, as the risk is considered too high, 168 00:10:47,939 --> 00:10:50,580 SERVEONE does not engage in 100% advance payments 169 00:10:51,520 --> 00:10:55,280 Conditional acceptance means that the supply date is not when the goods are delivered, 170 00:10:55,420 --> 00:11:01,019 but when inspection has been completed, at which point the tax invoice is issued 171 00:11:01,679 --> 00:11:04,369 This method is used for transactions that require inspection, such as test runs, 172 00:11:04,369 --> 00:11:07,340 and is applied by entering into a separate agreement with the supplier 173 00:11:08,200 --> 00:11:10,520 If the test run process is applied, 174 00:11:10,720 --> 00:11:14,200 the customer cannot complete inspection until it is done, so sales settlement cannot proceed, 175 00:11:14,760 --> 00:11:17,539 and suppliers are also unable to process delivery completion 176 00:11:18,539 --> 00:11:22,399 If SERVEONE proceeds with purchase settlement before sales settlement is possible, 177 00:11:22,779 --> 00:11:24,569 consigned inventory increases 178 00:11:24,789 --> 00:11:27,049 and cash flow is negatively affected 179 00:11:27,189 --> 00:11:31,079 Therefore, it is advisable to execute a contract with the supplier and follow this process 180 00:11:32,239 --> 00:11:36,089 Payment management refers to handling liabilities incurred from purchase settlements 181 00:11:37,009 --> 00:11:40,819 At SERVEONE, payment conditions differ depending on 182 00:11:40,979 --> 00:11:42,739 whether the supplier is classified as a subcontractor 183 00:11:43,539 --> 00:11:46,439 Suppliers are required to log in directly to 184 00:11:46,659 --> 00:11:48,599 the supplier front-end system using a certified digital signature 185 00:11:48,599 --> 00:11:50,879 and check whether they fall under subcontracting 186 00:11:51,559 --> 00:11:55,849 Once the classification is finalized, 187 00:11:56,229 --> 00:12:00,619 subcontractors must be paid within 60 days 188 00:12:01,039 --> 00:12:04,229 and non-subcontractors are paid within 120 days 189 00:12:04,509 --> 00:12:07,560 A supplier is considered a subcontractor if it is not a large enterprise 190 00:12:07,840 --> 00:12:11,550 and is engaged in commissioned manufacturing or processing work 191 00:12:12,550 --> 00:12:16,479 The method of payment to suppliers is primarily through bill issuance, 192 00:12:17,039 --> 00:12:20,139 and SERVEONE settles payments using a purchase card, 193 00:12:21,199 --> 00:12:25,380 which is essentially a form of electronic promissory note 194 00:12:26,400 --> 00:12:28,040 For subcontracted suppliers, 195 00:12:28,240 --> 00:12:32,920 zero-rated transactions are paid within 14 days and tax-exempt transactions are paid within 60 days 196 00:12:34,000 --> 00:12:37,610 For non-subcontracted suppliers, the standard payment term is 120 days 197 00:12:38,170 --> 00:12:42,819 However, some long-standing partners may still operate under a 90-day term 198 00:12:44,479 --> 00:12:46,999 The payment period is calculated based on the date of the tax invoice, 199 00:12:47,139 --> 00:12:50,779 the end of the purchase settlement month, 200 00:12:51,479 --> 00:12:55,639 determined by the bill issuance date plus the bill maturity period 201 00:12:56,819 --> 00:13:00,339 SERVEONE issues bills on the 13th and 30th of each month 202 00:13:01,059 --> 00:13:05,569 For example, for deliveries made in April, 203 00:13:05,769 --> 00:13:09,049 the tax invoices retroactively issued on April 30 204 00:13:09,309 --> 00:13:11,839 are matched with bill issuance on May 13 205 00:13:12,799 --> 00:13:16,049 Bill maturity is 1 day for 14-day terms 206 00:13:16,629 --> 00:13:19,709 47 days for 60-day terms 207 00:13:20,449 --> 00:13:22,679 77days for 90-day terms 208 00:13:23,919 --> 00:13:26,839 In other words, the maturity is counted from April 30, 209 00:13:26,959 --> 00:13:30,219 so that the bill can be cashed on the correct due date 210 00:13:31,719 --> 00:13:34,829 Since the maximum maturity under the Bill of Exchange Act is 90 days, 211 00:13:35,069 --> 00:13:39,200 bills for 120-day non-subcontractor payments are issued on the 30th 212 00:13:40,400 --> 00:13:45,520 For reference, the first digit indicates the payment condition type 213 00:13:47,120 --> 00:13:49,180 The standard payment condition is 6 214 00:13:49,740 --> 00:13:52,019 The second digit represents the issuance date information 215 00:13:54,840 --> 00:13:58,890 B means regular issuance, i.e., on the 13th or 30th 216 00:13:59,550 --> 00:14:02,519 The last two digits indicate the number of payment days, which is the most important part 217 00:14:02,899 --> 00:14:08,079 14, 60, 90 are directly correspond to the number of days 218 00:14:08,539 --> 00:14:11,479 120 days is written as C0, since it’s a three-digit number 219 00:14:12,059 --> 00:14:18,489 Here, 10 = A, 11 = B, 12 = C, 220 00:14:19,409 --> 00:14:23,520 so 120 is written as C0 221 00:14:24,260 --> 00:14:28,080 Since SERVEONE operates as a distributor, by the payment terms of the client companies, 222 00:14:28,080 --> 00:14:31,300 the payment terms for partners are often influenced 223 00:14:31,780 --> 00:14:36,160 So while the basic terms are determined by whether the partner is classified as subcontractor or non-subcontractor, 224 00:14:36,580 --> 00:14:41,520 the payment condition type, issuance date, and payment days may also vary 225 00:14:41,880 --> 00:14:43,560 depending on which business unit receives the delivery 226 00:14:44,640 --> 00:14:48,130 Unlike payments for the purchase of goods supplied to clients, 227 00:14:48,290 --> 00:14:52,180 general expenses are handled on a cash payment basis 228 00:14:52,960 --> 00:14:57,890 For example, if there is an urgent courier shipment and extra courier fees occur, 229 00:14:58,190 --> 00:15:02,039 or if a fee needs to be paid for a specific site or service, 230 00:15:02,399 --> 00:15:06,219 an electronic tax invoice is issued and entered into e-Accounting 231 00:15:06,579 --> 00:15:09,799 These liabilities are then paid in cash through firm banking 232 00:15:11,119 --> 00:15:14,469 Amounts under 10 million KRW are paid on the 25th of the following month 233 00:15:14,849 --> 00:15:18,449 Amounts over 10 million KRW are paid on the 30th of the following month 234 00:15:18,849 --> 00:15:21,939 The payment schedule is calculated based on the end of the month, 235 00:15:21,939 --> 00:15:26,029 meaning payments follow 25-day or 60-day terms 236 00:15:26,789 --> 00:15:31,339 However, IT expenses and 3PL logistics fees follow a 90-day payment rule 237 00:15:32,639 --> 00:15:35,499 For general expenses, including employee welfare costs, 238 00:15:35,499 --> 00:15:37,169 regular payment dates are 239 00:15:37,169 --> 00:15:41,069 the 10th, 15th, 25th, and 30th of each month 240 00:15:41,609 --> 00:15:46,299 If a payment needs to be made earlier than SUBONE’s standard payment terms, 241 00:15:46,719 --> 00:15:50,019 a request for expense payment schedule adjustment must be submitted 242 00:15:51,639 --> 00:15:54,379 When a supplier requests, “Please pay by note instead of cash,” 243 00:15:54,379 --> 00:15:56,540 a purchasing card is issued on the 13th, 244 00:15:56,680 --> 00:15:59,699 with a maturity date matching the standard cash payment terms 245 00:16:03,800 --> 00:16:06,420 Even when a supplier’s payment obligations arise, 246 00:16:06,580 --> 00:16:08,480 there are cases where we will withhold payment 247 00:16:08,820 --> 00:16:11,280 If the delivery proof is not valid, 248 00:16:11,640 --> 00:16:15,020 the item is scheduled for return, the delivery completion was processed incorrectly, 249 00:16:15,460 --> 00:16:16,900 a claim has been filed, 250 00:16:17,540 --> 00:16:20,799 or received a seizure notice, as explained earlier 251 00:16:22,039 --> 00:16:24,539 For all transactions from the 1st to the end of the month, 252 00:16:24,759 --> 00:16:29,880 settlement is carried out in early the following month 253 00:16:30,280 --> 00:16:34,620 The payment obligation is created, so by about the sixth business day, 254 00:16:34,620 --> 00:16:38,060 any request for payment holds must be formally submitted 255 00:16:38,380 --> 00:16:43,420 Then, those cases are excluded from purchasing card issuance on the regular 13th payment date 256 00:16:44,340 --> 00:16:46,650 In addition, when a partner is also a customer, 257 00:16:46,790 --> 00:16:49,330 under Article 24 of the basic transaction contract, 258 00:16:49,550 --> 00:16:52,120 the amounts payable and receivable are first offset, 259 00:16:52,400 --> 00:16:55,120 and only the balance is paid or collected 260 00:16:55,460 --> 00:16:59,500 In some cases, receivables and payables are offset through separate agreements 261 00:17:00,840 --> 00:17:03,280 The expenses processed in e-Accounting 262 00:17:03,280 --> 00:17:08,099 go through approval by the Finance & Accounting team, after which a payment liability slip is created and the payment is made 263 00:17:08,439 --> 00:17:12,299 Let me share a few typical cases where requests are often rejected 264 00:17:13,079 --> 00:17:14,629 When handling expenses in the future, 265 00:17:14,629 --> 00:17:19,480 please keep these in mind and check the expense processing regulations accordingly 266 00:17:20,560 --> 00:17:23,900 Business trip expenses must be processed per trip 267 00:17:24,240 --> 00:17:27,410 Even if you travel repeatedly to the same region, 268 00:17:27,610 --> 00:17:31,180 expenses should be recorded in 7-day segments within the schedule 269 00:17:31,980 --> 00:17:35,780 In addition, meal expenses during business trips are only recognized 270 00:17:35,780 --> 00:17:37,930 up to about 10,000 KRW per person per meal 271 00:17:38,230 --> 00:17:42,160 When multiple travelers dine together, you must list 272 00:17:42,160 --> 00:17:46,079 the travelers’ names in the trip request form or the expense report 273 00:17:46,959 --> 00:17:51,579 Meals with local SERVEONE employees at the destination should be processed as organizational activity expenses, 274 00:17:52,119 --> 00:17:55,499 and meals with clients or external parties should be processed as entertainment expenses 275 00:17:55,939 --> 00:17:58,100 and meals with clients or external parties should be processed as entertainment expenses 276 00:17:59,760 --> 00:18:05,410 Highway tolls, parking fees, and the use of car-sharing services such as SOCAR 277 00:18:05,590 --> 00:18:07,459 must always be accompanied by supporting receipts 278 00:18:08,359 --> 00:18:12,220 In addition, tax invoices must be processed by the first business day of the following month 279 00:18:12,920 --> 00:18:18,079 If they are not processed within this period, you must obtain a separate approval 280 00:18:19,800 --> 00:18:23,500 I will now explain the accounts receivable generated from sales 281 00:18:26,300 --> 00:18:29,960 First, let me outline the standards for recognizing revenue 282 00:18:30,520 --> 00:18:33,430 According to accounting standards, when a company recognizes revenue, 283 00:18:33,630 --> 00:18:36,220 it can either record the full transaction amount as sales 284 00:18:36,640 --> 00:18:39,110 or only recognize the commission portion 285 00:18:40,030 --> 00:18:43,100 Since SERVEONE mainly operates by purchasing goods 286 00:18:43,360 --> 00:18:46,860 from a third-party supplier and providing them to customers, 287 00:18:47,300 --> 00:18:50,190 if it is acting as the actual contracting party, 288 00:18:50,190 --> 00:18:52,300 gross revenue recognition is possible 289 00:18:53,040 --> 00:18:55,350 But, if it is acting only as an agent, 290 00:18:55,350 --> 00:18:58,540 then only the commission amount can be recognized as net revenue 291 00:18:59,920 --> 00:19:02,890 If the purchase cost of a product is 90 and the selling price is 100, 292 00:19:03,450 --> 00:19:08,620 under gross recognition, 100 is recorded as sales, while under net recognition, only 10 is recorded 293 00:19:09,640 --> 00:19:13,890 Currently, most of SERVEONE’s product supply transactions are recognized as gross sales 294 00:19:14,510 --> 00:19:20,859 But, in cases where SERVEONE does not have pricing authority, does not bear inventory risk, 295 00:19:20,859 --> 00:19:25,020 acting only as an intermediary, sales must be recognized on a net basis as commission revenue 296 00:19:25,800 --> 00:19:29,020 Therefore, if the transaction conditions with the customer 297 00:19:29,020 --> 00:19:31,750 indicate that SERVEONE can only act as an agent, 298 00:19:32,030 --> 00:19:35,000 it is best to consult the Finance and Accounting Team in advance 299 00:19:35,400 --> 00:19:37,739 to confirm whether gross revenue recognition is possible 300 00:19:40,059 --> 00:19:42,649 From this point onward, all processes will be explained 301 00:19:42,649 --> 00:19:45,840 under the assumption that revenue is recognized on a gross basis 302 00:19:48,679 --> 00:19:51,259 Similar to purchases, there are cases in sales 303 00:19:51,259 --> 00:19:53,419 where settlement discrepancies require closing adjustments 304 00:19:54,019 --> 00:19:56,729 For example, SERVEONE’s monthly closing is finalized on the 2nd business day 305 00:19:56,949 --> 00:19:59,869 If on the 3rd business day, 306 00:20:00,209 --> 00:20:02,859 a missed settlement of 10 for February occurs, 307 00:20:03,399 --> 00:20:07,269 but the client requires a January tax invoice for 100, 308 00:20:07,929 --> 00:20:10,989 then the February sales settlement 309 00:20:11,429 --> 00:20:15,759 have its tax documentation date reclassified to January 310 00:20:19,320 --> 00:20:22,780 Advance-issued tax invoices can also occur in sales 311 00:20:23,460 --> 00:20:27,680 When a client requests an invoice for undelivered orders 312 00:20:27,680 --> 00:20:30,160 often to utilize their budget, 313 00:20:30,400 --> 00:20:32,820 SERVEONE can process this through a prepayment approval 314 00:20:34,240 --> 00:20:36,330 If in January, a prepayment approval was made 315 00:20:36,970 --> 00:20:41,720 and 100 was invoiced (10 + 90), 316 00:20:42,980 --> 00:20:47,840 then when the actual delivery of 10 is completed in April, 317 00:20:48,760 --> 00:20:53,080 the VAT is still fully recognized in January for the 100, 318 00:20:53,400 --> 00:20:57,720 while only the additional 10 in sales is recorded in April 319 00:20:58,960 --> 00:21:04,380 If settlement discrepancies are found after the two-business-day closing window, 320 00:21:04,380 --> 00:21:08,020 they must be handled 321 00:21:08,380 --> 00:21:10,300 as exceptional cases 322 00:21:10,300 --> 00:21:12,760 with division head approval 323 00:21:13,780 --> 00:21:17,120 Under VAT law, advance-issued tax invoices are allowed 324 00:21:17,120 --> 00:21:19,400 when payment is received within 7 days, 325 00:21:19,860 --> 00:21:23,360 or the contract explicitly states different billing and payment dates, 326 00:21:23,800 --> 00:21:27,340 with a gap of no more than 30 days 327 00:21:27,440 --> 00:21:31,460 In practice, this means you must obtain an advance-issuance agreement letter from the client 328 00:21:31,760 --> 00:21:33,840 and then submit the request in S-MRO 329 00:21:34,640 --> 00:21:38,340 In this case, no sales revenue is recognized, and only a receivable is recorded 330 00:21:38,760 --> 00:21:41,180 Since prepayments are considered a liability, 331 00:21:41,440 --> 00:21:45,360 it is important to complete settlement quickly, meaning the actual delivery of goods must take place 332 00:21:46,660 --> 00:21:49,380 Sales accounting, like purchase accounting, 333 00:21:49,380 --> 00:21:51,200 is generated step by step throughout the business process 334 00:21:51,860 --> 00:21:54,860 Ultimately, sales are credited, 335 00:21:55,380 --> 00:21:57,540 VAT on sales is recognized, 336 00:21:58,400 --> 00:22:00,900 and accounts receivable are created, 337 00:22:01,440 --> 00:22:03,300 which are then cleared once payment is received 338 00:22:03,880 --> 00:22:05,730 When sales settlement is processed, 339 00:22:06,710 --> 00:22:08,510 an accounts receivable is recorded on the debit side, 340 00:22:09,290 --> 00:22:11,440 and product sales are recorded on the credit side 341 00:22:12,120 --> 00:22:14,580 At the time the sales are recognized, 342 00:22:15,540 --> 00:22:17,810 the inventory assets decrease, 343 00:22:17,810 --> 00:22:20,820 and the cost of goods sold is recorded on the debit side 344 00:22:21,660 --> 00:22:24,520 When a tax invoice is issued normally, 345 00:22:24,520 --> 00:22:27,060 or when a reverse tax invoice is registered, 346 00:22:27,780 --> 00:22:31,280 an accounts receivable is created on the debit side, 347 00:22:31,460 --> 00:22:34,600 and a temporary sales account is recorded on the credit side 348 00:22:34,900 --> 00:22:37,920 At this point, output VAT is added on the debit side 349 00:22:39,120 --> 00:22:43,500 The temporary sales account and temporary VAT account are offset and eliminated, 350 00:22:46,860 --> 00:22:50,240 and the payment received from the customer is recorded as a deposit received, 351 00:22:50,560 --> 00:22:52,920 which is then offset against the receivable 352 00:22:53,580 --> 00:22:54,850 Like this 353 00:22:55,810 --> 00:22:57,480 This is about managing collection terms 354 00:22:58,040 --> 00:23:01,000 Collection terms can be managed in 355 00:23:01,000 --> 00:23:03,400 the S-MRO site inquiry and operating unit inquiry 356 00:23:03,920 --> 00:23:05,820 When a business site is first created, 357 00:23:06,080 --> 00:23:09,600 the collection terms are reflected based on the sales contract 358 00:23:10,180 --> 00:23:12,440 The operating unit’s collection terms can be selected 359 00:23:12,440 --> 00:23:15,480 from the collection terms registered for the business site 360 00:23:16,480 --> 00:23:19,300 If an operating unit has multiple collection terms, 361 00:23:19,540 --> 00:23:22,180 the operations manager can choose the appropriate term 362 00:23:22,180 --> 00:23:24,120 at the tax invoice issuance stage 363 00:23:25,340 --> 00:23:29,280 Since the collection terms must be set in the system exactly as specified in the contract, 364 00:23:29,640 --> 00:23:33,100 any change to the collection terms requires a separate approval process, 365 00:23:33,720 --> 00:23:38,020 starting with a legal review to determine if contract amendments are necessary 366 00:23:39,200 --> 00:23:44,360 After issuing a tax invoice, if you wish to change the collection terms of an individual billing item, 367 00:23:44,820 --> 00:23:48,180 it can be handled through a one-time approval for collection term change 368 00:23:49,500 --> 00:23:53,300 If payment is not received by the due date set in the collection terms, 369 00:23:53,500 --> 00:23:55,250 it is classified as overdue receivables 370 00:23:55,710 --> 00:23:58,800 Every Wednesday, overdue receivables exceeding one day 371 00:23:58,800 --> 00:24:00,400 are shared via email 372 00:24:01,460 --> 00:24:03,200 Types of overdue receivables include 373 00:24:03,520 --> 00:24:06,660 delays in cash deposits where payment has not been received, 374 00:24:07,320 --> 00:24:10,040 delays in promissory note issuance where the note has not been issued, 375 00:24:10,980 --> 00:24:15,760 and overdue note maturity, where the note is issued 376 00:24:15,760 --> 00:24:17,400 but the due date exceeds the agreed terms 377 00:24:18,360 --> 00:24:22,000 If the note issuance itself is delayed, it is classified as a note issuance delay, 378 00:24:22,660 --> 00:24:27,940 and if the note has been issued but the maturity date is overdue, 379 00:24:27,940 --> 00:24:31,000 it is classified as overdue note maturity 380 00:24:32,280 --> 00:24:35,900 For overdue receivables, the sales representative must check the reason 381 00:24:35,900 --> 00:24:37,570 and record it in the system, 382 00:24:38,070 --> 00:24:41,100 and if the delay exceeds 15 days, the order will be blocked, 383 00:24:41,400 --> 00:24:44,840 requiring submission of a one-time collection term change request 384 00:24:46,160 --> 00:24:48,460 Receivables management and working capital management 385 00:24:49,480 --> 00:24:54,500 Working capital refers to assets such as cash, deposits, notes receivable, and accounts receivable 386 00:24:54,700 --> 00:24:58,740 that are highly liquid and can be mobilized immediately for business activities 387 00:24:59,640 --> 00:25:03,440 To improve financial liquidity, receivables should be collected quickly, 388 00:25:03,640 --> 00:25:07,520 payables should be delayed, and inventory should be sold quickly 389 00:25:08,740 --> 00:25:12,520 Accounts payable turnover days, accounts receivable turnover days, and inventory turnover days 390 00:25:12,960 --> 00:25:17,740 are indicators of how quickly payables, receivables, and inventory are turned over 391 00:25:18,600 --> 00:25:23,780 Therefore, to increase working capital, inventory turnover days should be reduced, 392 00:25:24,280 --> 00:25:29,260 accounts payable turnover days should be extended, and accounts receivable turnover days should be shortened 393 00:25:32,380 --> 00:25:34,700 Finally, this is credit management 394 00:25:38,640 --> 00:25:41,300 SERVEONE provides credit to customers, 395 00:25:41,640 --> 00:25:45,680 meaning goods are supplied and receivables are collected after a certain period, 396 00:25:45,680 --> 00:25:48,160 through transactions on credit terms 397 00:25:49,320 --> 00:25:52,260 A customer’s ability to pay depends on both internal and external business environments 398 00:25:52,260 --> 00:25:54,760 and their financial capacity, which can change frequently 399 00:25:55,200 --> 00:25:59,800 Therefore, it is necessary to decide how to evaluate and monitor them, and how to respond accordingly 400 00:26:00,860 --> 00:26:05,500 At SERVEONE, we mainly use the NICE Bizline system, formerly known as RM1, 401 00:26:05,500 --> 00:26:08,240 to check and monitor customer credit information 402 00:26:09,240 --> 00:26:12,060 When receiving new orders or when there is a request for increased credit, 403 00:26:12,280 --> 00:26:17,704 and also during May and June each year when new customer credit information is updated, 404 00:26:17,904 --> 00:26:20,684 we regularly review customer credit information 405 00:26:21,144 --> 00:26:24,324 For customers with significant changes in their credit information, 406 00:26:24,544 --> 00:26:26,164 we receive separate notifications, 407 00:26:26,324 --> 00:26:28,504 which allows us to manage them on a daily basis 408 00:26:31,584 --> 00:26:36,264 Currently, the credit limit is set based on the monthly average sales amount from the business plan, 409 00:26:36,564 --> 00:26:41,184 with a weighted factor applied depending on the customer’s credit rating, ranging from 100% to 120% 410 00:26:41,644 --> 00:26:47,824 Then, a multiplier of 1.1 is applied to account for VAT, and we add 30 days to the standard payment terms, 411 00:26:48,384 --> 00:26:53,063 and finally, the formula divides this total by 30 days to calculate the credit limit 412 00:26:54,123 --> 00:26:58,823 If the credit limit is exceeded or receivables are overdue by more than 15 days, 413 00:26:59,103 --> 00:27:01,544 orders and shipments are blocked 414 00:27:01,964 --> 00:27:04,983 For customers under special management, the block occurs not after 15 days 415 00:27:05,383 --> 00:27:07,424 but immediately after a 2-day delay 416 00:27:08,544 --> 00:27:11,224 “Special management” applies to customers with a credit rating of B or lower, 417 00:27:11,404 --> 00:27:13,684 who have a history of overdue payments, 418 00:27:14,024 --> 00:27:18,124 or those with a credit rating of CCC+ or below 419 00:27:19,224 --> 00:27:22,444 The credit block is automatically lifted once the reason is resolved, 420 00:27:22,884 --> 00:27:26,023 but it can also be manually lifted through a separate approval process 421 00:27:27,303 --> 00:27:33,024 Through the S-MRO Site Management, Credit Limit Inquiry, Credit Increase & Adjustment Request menu, 422 00:27:33,204 --> 00:27:36,723 you can request a credit increase or adjust the limit 423 00:27:37,603 --> 00:27:41,763 The remaining credit limit refers to the initial credit limit 424 00:27:42,043 --> 00:27:44,223 minus the utilized credit 425 00:27:44,663 --> 00:27:48,864 Utilized credit refers to the sum of all open orders, 426 00:27:48,944 --> 00:27:51,883 that is, the total value of all currently active orders, 427 00:27:52,203 --> 00:27:57,203 plus all open accounts receivable (outstanding receivables) 428 00:27:58,303 --> 00:28:02,964 A notification email is sent to the responsible manager once a week based on the credit utilization rate 429 00:28:03,864 --> 00:28:09,224 The first alert is sent when utilization reaches 80%, and the second when it exceeds 95%, 430 00:28:09,464 --> 00:28:12,623 so managers should monitor in advance to maintain control 431 00:28:13,963 --> 00:28:17,424 The formula for calculating an increased credit limit can be referenced below, 432 00:28:17,904 --> 00:28:20,104 and when a request for an increase is made in the system, 433 00:28:20,404 --> 00:28:23,903 an approval document is generated and goes through the approval process 434 00:28:25,343 --> 00:28:30,603 If you wish to transfer a credit limit between business units under the same corporation, 435 00:28:31,223 --> 00:28:34,863 you can use the “Transfer/Reduction Approval” document for that purpose 436 00:28:36,803 --> 00:28:39,743 This concludes the final part of the MRO Process course, 437 00:28:39,903 --> 00:28:42,263 focusing on debt and receivables management 438 00:28:42,943 --> 00:28:45,823 If you have any questions regarding the lecture content, 439 00:28:46,043 --> 00:28:48,723 please contact Hwang Seung-joo, Senior Manager of the Finance and Accounting Team 440 00:28:49,583 --> 00:28:51,243 Thank you for your attention