Topic: Choose
a company of your choice and extract the following: 1. Sales Policy, a. Cash
Policy b. Credit Sales Policy 2.
Purchase Policy a. Bill Payable Policy, b; Bill Receivable Policy 3.Investment
Policy 4. Debt Policy 5. Whistle Blowing Policy 6. Recruitment Policy
COCOA MARKETING COMPANY LIMITED
The following are extract policies of Cocoa
Marketing Company Limited in year 2004.
Sales
Policy
The major sales objective of the Company is to sell to the
external and local markets at the best prices obtainable and to undertake its
marketing function in a manner which will maximize the foreign exchange revenue
that will accrue to the country.
Negotiation
Sales by the CMC are made by private treaty on the basis of
World Cocoa Market values at the best prices obtainable. Negotiations are
governed by normal commercial considerations only, without any kind of
discrimination in favour of or against any individual firm or particular
company.
Payments
Sales by the company, except those made under special trade
agreements, are effected on the basis of Cash Against Documents on first
presentation payment terms. The Company, however, reserves the right to insist
on the establishment of Letters of Credit whenever it deems it necessary to do
so. Sales under trade and payment agreements are made against Letters of
Credit. Sales by the CMC are negotiated on a net basis and all local bank
charges are for the account of the Buyer.
CASH SALES POLICIES
The company faces multiple risks related to cash, cash
equivalents, and cheques that are received by departments, the greatest of
which is loss or theft of funds. The best way to mitigate this risk is to
deposit the funds in a company bank account as quickly as possible. This
practice also allows the company to take advantage of options that will
maximize investment returns that could result in reduced economic burden.
It is also important that the proper internal controls
are in place to reduce the risk and temptation of fraud and to ensure the
deposits are recorded accurately in the Company’s general ledger.
CREDIT SALES POLICY
Developing a credit policy is
something a business eventually has to face. One of the basic decisions the
company has to make when is whether or not we are going to extend credit to
other businesses and consumers. This is a decision to be taken very seriously
as it will impact the company cash flow and
even the profit.
Here are three factors
that the company considered in its credit policy
and that should influence every decision whether or not to extend credit to
customers. The company should grant credit only if the positives of doing so
outweigh the negatives.
1. The Effect on Cost of Goods Sold
Whether
the company sell products, we have to
have them available and, in the case of products, in stock, when a sale is
made. When we extend credit, that means paying for that product in order to
have it in stock but not getting paid for it immediately when it is purchased.
Even
though we will eventually get paid, our business has to have enough cash flow
to compensate for the delayed payment.
2. The Probability of Bad Debts
If
the company makes all its sales for cash, there is no possibility of bad debts
or debts it cannot collect. If any percentage of the company’s sales is on
credit, there exists the possibility of bad debts or debts, as a business
owner, will never collect. When the company developed the credit policy, it
allow for some percentage of its credit accounts that will never be paid. The
trade-off here is that some percentage of credit sales will never be paid.
3. Offering a Cash Discount
Particularly
when the company offers credit on a business-to-business (B2B) basis, most
companies offer other businesses a cash discount. In other words, if the
business pays the bill within the discount period, the business gets a
discount. If it doesn’t pay within the discount period, then they must pay
within the credit period or the original period within which the bill is due.
Investment Policy
The Company’s objective is to
generate an attractive rate of return for Shareholders, predominantly through
capital appreciation, by taking advantage of opportunities to invest.
The Company aims to provide
equity and equity-related investment capital, such as convertible loans, to
private companies which are seeking capital for growth and development,
consolidation or acquisition, or as a pre-IPO financing.
In addition, the Company
intends to invest in publicly traded equities which have securities listed on a
stock exchange or over-the-counter market. These investments may be in
combination with additional debt or equity-related financing, and in
appropriate circumstances in collaboration with other value added financial
and/or strategic investors.
PURCHASE POLICY
BILL
PAYABLE POLICY
Authorized
Expenses
Expenses
itemized in the annual Budget as approved by the Board are authorized for
payment.
A majority vote of the Board is required
to obtain authorization for payment of expenses not included in the annual
Budget. In addition, a majority vote by the Board is required to obtain
authorization for all scheduled or open payment accounts (e.g. monthly billing
accounts, open-ended hotel/catering accounts etc.).
Procedures
Request
A
Payment Request Form must be completed for payment of a bill or reimbursement
of
an
incurred expense. The Payment Request Form is submitted to the Managing
Director. The following are required with submission of a Payment Request Form:
1. Description. This must include
sufficient information for the Managing Director to determine if the expense is
authorized and for the Treasurer to determine which account should be debited.
2. Total amount payable.
3. Payee.
4. Method of payment. This must include
sufficient information for the Treasurer to determine how to make the payment (e.g.
a name which the cheque should be written).
5. Requestor name.
6. Requestor signature and date.
7. Documentation. This must include
sufficient information to prove the total amount of the payment.
Approval
The Managing
Director determines if the expense is authorized or obtains authorization from
the Board. If the expense is not authorized, the Managing Director returns the
Payment Request Form to the requestor with an explanation.
If
the expense is authorized, the MD signs and dates the Payment Request Form and
forwards the form and all documentation to the Treasurer for payment. To
expedite payment, a copy of the signed form and documentation is sent to the
Treasurer.
Payment
The
Treasurer makes all approved payments in a timely manner. The Treasurer pays
bills from Chapter accounts by cheques. In
no case will cash be used for payments.
BILL RECEIVABLE
POLICY
The company has established a due date for customers. The company
also has written policies and procedures, and a system of internal control for
managing the Bills receivable. The written procedures include at a
minimum:
- Requirement for establishing and recording a bill receivable.
- Collection actions and timeline for the collection process.
- Approvals for adjustments to accounts.
- Periodic review of past due bills.
- Criteria for writing off bills and approvals needed.
All bills receivable activities undertaken should be documented
in writing and, as appropriate, recorded in the company Integrated Record
System (IRS).
DEBT POLICY
The
Debt Policy sets forth comprehensive guidelines for the financing of capital
expenditures. It is the objective of the policy that (1) the District obtain
financing only when advisable, (2) the process for identifying the timing and
amount of debt or other financing be efficient, (3) competitive interest and
other costs be obtained.
USE
OF DEBT FINANCING
Debt
financing, to include general obligation bonds, revenue bonds, certificates of
participation, lease/purchase agreements, and other obligations permitted to be
issued, shall be used only to: purchase revenue rolling stock; purchase or
construct related operating equipment; and/or purchase or construct real
property, facilities, and other improvements. The useful life of the asset or
project shall exceed the payout schedule of any debt the company assumes in
order to acquire the asset or project.
SHORT-TERM
DEBT
Short-term
obligations may be issued to finance projects or portions of projects for which
the company ultimately intends to issue long-term debt; i.e., it will be used
to provide interim financing that eventually will be refunded with the proceeds
of long-term obligations.
INTERIM
Interim
financing may be appropriate when long-term interest rates are expected to
decline in the future. In addition, some forms of short-term obligations can be
obtained more quickly than long-term obligations and, thus, can be used in
emergencies until long-term financing can be obtained.
LONG-TERM
DEBT
Long-term
obligations will not be used for operating purposes, and the life of the
obligations will not exceed the useful life of the projects financed. Debt
service structure will approximate level debt service unless operational
matters dictate otherwise.
WHISTLE BLOWING POLICY
The company has an established Code of Ethics which
sets out the standards of conduct expected in the management of its business.
All employees are expected to carry out their duties in a manner that is
consistent with the Code. If employees become aware of circumstances which are
not in compliance with the Code then they should communicate their suspicions
using the “whistle blowing” policy explained below.
Whistle blowing – what
is it?
The term “whistle blowing” is most commonly used to
describe when an employee (or ex employee) discloses wrong doing within an organization.
Such wrong doing can include unlawful conduct, financial malpractice or dangers
to the public or the environment. Public
disclosure of confidential information about an organization could clearly be a
breach of an employee’s contract, therefore special arrangements are needed to
protect both the employee and the organization. It is important that the
employee’s concerns about illegal or unethical activities can be raised without
fear of victimization and that the organization is alerted to malpractice early
so that it can be stopped and the perpetrators dealt with.
A whistle blowing procedure allows employees to
raise concerns with management about the conduct of others which they consider
to be in some way damaging to the organization or others within it.
RECRUITMENT
POLICY
Introduction
Effective and
consistent recruitment practices are essential to ensure that all applicants
are treated fairly and with diversity and equality of opportunity and that
costly recruitment mistakes are avoided.
The
recruitment process must result in the selection of the most suitable person
for the job in respect of skills, experience and qualifications.
This Policy of
the company defines the principles that the Company considers important in the
recruitment process and aims to ensure that consistency and good practice is
applied across the Company.
It is against
the Company’s Policy and against the law in many cases to discriminate either
directly or indirectly on the grounds of race, nationality, ethnic origin,
gender, marital status, pregnancy, age, disability, sexual orientation, gender
reassignment, ethnicity, cultural or religious beliefs.
CONCLUSION:
The Company’s
policies and procedures reflect its commitment to achieving and maintaining
equal opportunities to its customers and the society at large. It is the responsibility of the company to
monitor continually and evaluate formal and informal practices and procedures
to ensure that they do not directly or indirectly discriminate against any
individual, group or company.
REFERENCE:
Chinelo
Grace Obeleagu-Nzelibe (Mrs) & Bissan D.J. Ezekiel (2011), Business
Policy and Strategic Management;
Published and Printed by Joyce Graphic Printers and Publishers, Kaduna.
Google, Search Engine, 2014.
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