ACCT10003 Lecture 5: Sales and Collections Business Process - Lecture 5
17 May 2018
School
Department
Course
Professor
Sales and Collections Business Process
A Sale
•Business perspective: rental to the business operations
-Primary aspect of the business
-Cash flow
-Business relevance and future
-Growth
•Underlying economic event - swap
•Accounting effect:
-Sales price and basis (cash or credit)
-Inventory cost price
-Cash receipt (if credit sale)
•A sale cannot occur without underlying business events:
1. Sales events (order, shipping, billing)
-Accepting customer orders
-Approving credit
-Filling and dispatching orders
-Invoicing customers
-Recording the sales
2. Cash receipt events
-Receiving cash
-Recording receipts
-Depositing cash in bank
3. Adjustment events
-Sales returns and allowances
-Bad and Doubtful debts
How a Sale Happens
•Cash - no time gap
•Credit - time gap
Business goals - sales
•Identify potential customers
-What demographic is the company targeting?
-Are there a particular set of potential customers that are not having their needs met?
•Make sales (meet targets)
-Think about pre-sales activities and how goals in this area may impact on other goals such as
for sales order processing
-How can sales be maximised
-How we can prevent customers from going to competitors
•Maintain customer loyalty
-Are you trying to differentiate your company through price, quality or something else
-Consider pricing alternatives
-Maintain a strong quality control regime
-Ensure that your products or services are constantly innovative
•Deliver required goods
-Try to provide goods as soon as possible - maintain an efficient system
-Ensure that goods provided are correct goods
-Ensure that goods are received by the customer in excellent condition
1
Credit Sales
•Risk of delivery without cash receipt
•Policies and procedures to minimise:
-credit check
-credit references
-check ABN
-outstanding debts - ageing of receivables
-only have cash sales (reduces competitiveness)
•Internal Control
•Identify and develop internal controls
Modelling a Sale
•Cash sale:
-Straight exchange
-For every cash sale, only one cash receipt
-For every cash receipt, only one sale
2
Document Summary
A sale: business perspective: rental to the business operations. Growth: underlying economic event - swap, accounting effect: Sales price and basis (cash or credit) Cash receipt (if credit sale: sales events (order, shipping, billing, a sale cannot occur without underlying business events: Recording the sales: cash receipt events. Depositing cash in bank: adjustment events. How a sale happens: cash - no time gap, credit - time gap. Business goals - sales: identify potential customers, maintain customer loyalty, make sales (meet targets) for sales order processing. Think about pre-sales activities and how goals in this area may impact on other goals such as. How we can prevent customers from going to competitors. Are you trying to differentiate your company through price, quality or something else. Ensure that your products or services are constantly innovative. Try to provide goods as soon as possible - maintain an ef cient system. Ensure that goods provided are correct goods.
