Converting A Credit Sale To Cash In The Sarbanes Oxley Era

Form 8K is a current report filed for any
month in which significant events occur for
a company subject to SEC rules.

The Sarbanes-Oxley Act (SOA) is
comprised of a number of sections, each
of which requires action by the reporting
(issuing) company. Most of the attention
thus far has focused on Section 404-
Management Assessment of internal controls.

Since its arrival perhaps the most
significant action has been the
requirement for CFOs and CEOs to
personally certify and attest to the
accuracy of their companies' financial
results. Most enterprises were able to
comply with that SEC regulation through
manual processes and without much
tinkering to underlying systems and
processes.

Section 409 calls for real-time reporting of
material events that could affect a
company's financial performance. The
time-sensitive aspect of this regulation will
likely put significant pressure on existing
data infrastructures.

A Section 409 disclosure may trigger a
process in which the credit manager
determines whether or not open account
terms are still appropriate, and if so, under
what terms and conditions future sales can
be made safely.

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