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Ch 12: Revenue cycle (Key decisions (Product customization, Amount and…
Ch 12: Revenue cycle
Revenue cycle is set of repeated business activities and data processing operations that provide goods and services to customers and collecting cash.
Primary objective: provide the right product in the right place at the right time for the right price.
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Revenue cycle activities
Sales Order Entry
Taking customer order
It recorded in a sales order document
Sales order document contain information about (Product number , quantity , price , salesperson's ID)
To improve taking customer order process:
1- Send orders directly to the warehouse to pick and ship
2- use electronic data interchange (EDI) to take orders
3- Automate price change\promotion notifications
4- Use sales history to customize encouragement
5- choice boards to customize orders
6- handhelds in the field
Perform Credit Check
Approve credit after checking history:
1- General authorization - regular business (every time sales happens they authorize the check)
2- Specific authorization - new customers (buy now pay later)
To improve performing credit check process:
1- Automate credit limit and A/R balance checking
2- Emails the credit manager for special authorization
Inventory availability
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Step 2: Check unit availability
1- yes, complete the sales order
2- No, initiate a back order
Step 3: making sure of the accuracy
1- careful shipping/sales data entry
2- Not running similar items through scanned (pepsi & 7up)
3- Entering return items in the system
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Billing
Invoicing
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Items, quantity, price, and terms
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A/R Update
Debit A/R when goods are shipped
Credit A/R when payment are received
Open-invoice: pay per invoice
Balance forward: Pay per monthly statement
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Exceptions
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Write off uncollectible, customers don't pay
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Threats
Sales order entry
Taking order: Incomplete or inaccurate order, Invalid orders
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