Final answer:
The tickler file ensures the effectiveness of operations by verifying that shipping is accompanied by timely billing, preventing revenue loss and aiding the billing cycle.
Step-by-step explanation:
The control plan of review shipped not billed sales orders, or tickler file, helps to ensure the effectiveness of operations by confirming that sales orders that have been shipped are also billed in a timely manner.
This process works to avoid revenue loss for the company and supports the billing cycle by keeping track of orders that have been sent out but not yet invoiced to the customer.
By doing so, this control ensures that billing for sales is completed, thus contributing to the company's cash flow and preventing the accumulation of unbilled revenue.
By regularly reviewing the tickler file, businesses can identify sales orders that have been shipped but not yet billed, allowing them to promptly generate and send invoices to customers. This helps ensure that revenue is recognized in a timely manner, improving cash flow and overall financial performance.
For example, let's say a company ships products to customers but fails to bill them promptly. If the tickler file is not utilized, the company may not realize the oversight until much later, leading to delayed or lost revenue. By implementing a control plan to review the tickler file, the company can ensure that all shipped orders are promptly billed, minimizing any potential financial losses.