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REVENUE AND RECEIPTS CYCLE - Coggle Diagram
REVENUE AND RECEIPTS CYCLE
Ordering Function The objective of this function is to record orders from customers and initiate action to fill them
The documentation present within the ordering function can be summarized as follow:
• Customer Order
• Internal sales order (hereafter known as ISO)
• Price list
• Credit application form
• Credit bureau information
When an order is received from a customer, the person responsible for ordering will generate an ISO.
Internal sales order should:
a. Be numerical
b. Contains the customer details
c. Specifies quantity ordered
d. Contains prices per official price list
e. Authorised by credit manager/sales manager
Dispatch Function The objective of this function is to fill accepted orders promptly and accurately and to ensure only authorised orders are acted on
The documentation present within the dispatch function can be summarised as follow:
Picking slip
• Delivery note
• Back order note (a customer order that cannot be filled when presented)
• List of deliveries
This function identifies two types of customers, namely new customers and existing customers.
New customers have to go through a credit application process:
i. Credit application process is as follows:
Application form to be completed;
Background checks to determine if the customer is creditworthy;
If customer is creditworthy credit department will establish credit limits;
Capture information on permanent master file; and
Changes to details must be authorised by credit controller
Existing customers:
i. If it’s a valid customer (already has an account) client should present either identity number or account number
ii. The credit limit should be checked and if the credit limit has been exceeded the order cannot be accepted.
Invoicing Function The objective of this function is to notify the customer promptly of amounts due for goods supplied.
The documentation present within the invoicing function can be summarised as follow:
Sales invoice
• Price lists
Recording Function
The documentation present within the recording function can be summarised as follow
• Invoice
• Sales journal
• Debtors ledger
• General ledger
Credit Management Function
The documentation present within the credit management function can be summarised as follow
All records kept in the cycle are relevant
• Age analysis
• Monthly statement
• Credit bureau information
THE INTERNAL CONTROLS AND CONTROL OBJECTIVES IN THE REVENUE CYCLE FOR CREDIT SALES:
Occurrence/Validity: All recorded credit sales are valid and supported by proper documentation
Authorisation: All credit sales are authorised according to company policy.-
Completeness: All valid credit sales are recorded and nothing is left out.
Recording: All credit sales invoices are recorded correctly Classification: All sales are correctly classified according to the nature thereof.
Cut off: All sales transactions are recorded in the correct reporting period
THE INTERNAL CONTROLS AND CONTROL OBJECTIVES IN THE RECEIPTS CYCLE
Occurrence/Validity: All payments and discount on debtors' accounts are valid and are supported by appropriate documentation
Authorisation: All credit adjustments, e.g. credit notes, discounts, etc., are authorised according to company policy
Completeness: All valid payments received from debtors are recorded
Accuracy: All payments and discounts accounted for at the correct amount and discounts are accurately calculated.
Recording & Classification: All payments and discounts are correctly classified and recorded
Cut off: Payments and discounts are recorded in the correct period to which it relates.
Internal Control