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Sales process INTRODUCTION Business firms and non – for – profit organizations depend on revenues from customers for their continued existence . Revenues arise because the business firms and organizations determine the needs of certain customers and finds ways to serve these needs.

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introduction
INTRODUCTION
  • Business firms and non – for – profit organizationsdepend on revenues from customers for their continued existence .
  • Revenues arise because the business firms and organizations determine the needs of certain customers and finds ways to serve these needs.
  • In the simplest form , the revenue cycle is the direct exchange of finished goods or services for cash in a single transaction between seller and a buyer .
  • more complex revenue cycle process sales on credit , many days or weeks may pass between the point of sale and the subsequent receipt of cash .
relationships to the organization
RELATIONSHIPS TO THE ORGANIZATION
  • The main organizational units involved in the sale transaction processing cycle : the marketing / distribution

And Finance / accounting functions

  • The two units interact closely to perform the processing steps with the sale cycle .
relationships to the organization4
RELATIONSHIPS TO THE ORGANIZATION
  • Marketing management objectives :
    • Determining and satisfying the needs of customers .
    • Generating adequate revenue to cover costs and expenses , replace assets , and provide an adequate return on investment .
relationships to the organization5
RELATIONSHIPS TO THE ORGANIZATION
  • The top marketing manager is often a vice – president , whose responsibilities typically involve :
    • Market research focus on the market for the firm’s products or services by studying customer’s attitudes , preference , and spending power .
    • Promotion and advertising improve the market's awareness of the firm’s products or services by establishing and executing promotional strategies such as direct mailings , telemarketing , and dealer motivation.
relationships to the organization6
RELATIONSHIPS TO THE ORGANIZATION
  • Customer serviceshandles customer inquiries and complaints about products and services .
  • product or services development and planningfocus on the product or services lines , including styling , packaging , and performance
  • Sales concentrates on the selling effort through sales forecasts and evaluation of sales performance .
  • Shipping and transportationprovide the distribution support for the marketing function to ensure the orders goods are delivered to customer promptly , in good condition , and in accordance with customer specification .
relationships to the organization7
RELATIONSHIPS TO THE ORGANIZATION
  • the objective of financial and accounting management relate broadly to funds , data , information , planning , and control over recourses
relationships to the organization8
RELATIONSHIPS TO THE ORGANIZATION
  • The top financial manager in many firms is the vice- president of finance – tow managers are often directly to this top manager :

treasurer

controller

Budgeting

And cash

planning

Credits

And

collections

cash

Receipt

Belling

Inventory

control

Accounts

Receivable

General

Ledger

Aids in

Developing

Short-range

And long –

Range

Budgets and

Cash

forecasts

Develops

Credit and

Collection

Policies and

administrates

The policies

With respect to

Individual

customers

An arm of the

Cashier,

Deposits

Cash received

And maintains

The related

Records .

Prepares

The sales

Invoice

Maintains the

Records

pertaining to

Inventory

Balances .

Maintains the

Accounts of

Individual

Customers

maintains the

ledger of all

Balance sheet

And income

Statement

Accounts from

Which financial

Reports are

prepared

objective of the sale process
OBJECTIVEOF THE SALE PROCESS
  • The primary objective in processing revenues is to achieve timely and efficient cash collection.
  • Objectives of the AIS for the Sales Process :
    • tracking sales of goods and / or services to customer .
    • Filling customers orders .
    • Billing for goods and services .
    • Collecting payment for goods and services .
    • Forecasting sales and cash recipes .
inputs to the sale pprocess
INPUTS TO THE SALE PPROCESS
  • Sales order :

a formal , multicopy form prepared from the customer order , at the time a customer contracts

for goods or services.

inputs to the sale pprocess11
INPUTS TO THE SALE PPROCESS
  • Sales invoice :

the document that sent to customer to reflect the product or products purchased, price, and the terms of payment.

inputs to the sale pprocess12
INPUTS TO THE SALE PPROCESS
  • remittance advance :

a document that shows the amount of the cash receipt from a customer

You have probably seen a remittance advice before. When you pay your Visa or MasterCard bill.

inputs to the sale pprocess13
INPUTS TO THE SALE PPROCESS
  • packing slip : a copy of the sales order or picking list enclosed

with the goods when they are packaged for

shipping order

  • Shipping notice : often a copy of the sales order or a separate

shipping document that serves as proof

that the goods were shipped .

inputs to the sale pprocess14
INPUTS TO THE SALE PPROCESS
  • Debit/credit memoranda :

are source documents affecting both the sales

and purchasing process. An organization issues these memoranda to denote the return of damaged goods of discrepancies about the amount owed.

inputs to the sale pprocess15
INPUTS TO THE SALE PPROCESS
  • Business organizations are beginning to recognize the value of the data they collect about their customers and sales transactions in terms of improving customer satisfaction and profitability. As a result, they are purchasing or developing customer relationship management (CRM) systems to gather, maintain, and use these data.
events in the sales process
EVENTS IN THE SALES PROCESS
  • The data flow diagram presents an overview of the logical activates that constitute the sale order processing system
events in the sales process17
EVENTS IN THE SALES PROCESS
  • The high- level system flow chartprovides an overview of the AIS for the sales process
  • This view assumes an online sales order. Notice the lack of paper documents – e-mail and electronic images replace written documents.
  • The flowchart also assumes that the AIS uses a centralized database that integrates all the data files..
benefits of the online input batch processing system
BENEFITS OF THE ONLINE INPUT BATCH PROCESSING SYSTEM
  • Sales are processed and shipped more quickly → so that customers should be better satisfied with the service and more likely to place orders in the future .
  • Sales data update records as soon as orders are received , thereby keeping key order and inventory information more up-to-date .
  • Data are validated upon entry → so that errors are detected more quickly and reprocessing delays due to undetected errors are reduced.
  • Paperwork flows are reduced , as when sales order data are entered from phone calls or orders are transmitted via electronic data interchange networks ..
benefits of the online input batch processing system19
BENEFITS OF THE ONLINE INPUT BATCH PROCESSING SYSTEM
  • Accounting related updating runs (i.e.. Billing, cash receipt) are efficient and better controlled, since sales and cash receipt transactions are handled in batches with control totals .
  • accounting-related processing is also simplified , since transaction are posted without sorting and since the relevant files are on-line and integrated.
  • Information that is both current and integrated can be easily retrieved by clerks and managers ; thus , inquiries (e.g., from customers) can be answered quickly and correctly, and control reports and summaries can be generated for managers as needed .for instance, the accounts receivable aging schedule and sales analysis can be viewed or printed as often as desired .
output report
OUTPUT ( REPORT )
  • Financial statement information

An AIS uses some of these outputs to produce external accounting reports, such as financial statements, as well as internal reports, such as management reports.

  • Customer billing statement

This statement summarizes outstanding sales involves for a particular customer and shows the amount currently owed.

output report21
OUTPUT ( REPORT )
  • The aging report

shows the accounts receivable balance broken down into categories based on time outstanding.

  • The bad debt report

contains information about collection follow-up procedures for overdue customer accounts. This allows management to track the effectiveness or collection efforts.

output report22
OUTPUT ( REPORT )
  • Cash receipts forecast.

Data such as sales amounts, terms of sale, prior payment experience for selected customers, and information from aging analysis reports and cash collection reports are all inputs to this forecast.

  • Customer listing

This report is likely to show customer ID numbers (for uniquely identifying each customer), contact name, shipping and billing addresses, credit limits, and billing terms.

output report23
OUTPUT ( REPORT )
  • Sales analyses report

By capturing detailed data about each sale, the AIS produces reports to help management monitor sales activities and plan production and marketing effort.

output report24
OUTPUT ( REPORT )
  • Demand managerial report

the information they contain is used primarily for managerial decision making and control .

  • Types of managerial decisions
    • marketing decision
    • Financial decision
output report25
OUTPUT ( REPORT )

Marketing decisions

  • Which types of markets and customers are to be served ?
  • Which specific products are to be provided to customers, including new products to produce?
  • What prices are to be charged , and what discounts are to be allowed ?
  • What after-sales services are to offered ?
  • What channels of distributions are to be employed?
  • What marketing plans and budgets are to be established for the coming year ?
output report26
OUTPUT ( REPORT )

financial decisions

  • What criteria are to be employed in generating credit to potential customers ?
  • What collection methods are to be employed in minimize bad debts ?
  • What accounts receivable records are to be maintained concerning amounts owed by customers ?
  • What sources , other than receipts from sales are to be employed in obtaining needed funds for operations ?
  • What financial plans and cash budgets are to be established for the coming year ?
internal control
INTERNAL CONTROL
  • RISK EXPOSURES transaction with in the sales revenue cycle are exposed to several types of risk .
  • For example :
    • Credit sales made to customers who represent poor credit risks
    • Losses from bad debts
    • Unrecorded or unbilled shipments
    • Losses of revenue , overstatement of inventory and understatement of accounts receivable in the balance sheet .
    • Accessing of accounts receivable , merchandise inventory , and other records by unauthorized persons .
    • Losses of security over such records , with possibly detrimental use made of the data accessed .
internal control28
INTERNAL CONTROL
  • In order to counteract such risk exposures , a firm must establish a Varity of internal control
  • Several key control objectives are to be ensure that :
    • All customers who are accepted for credit sales are creditworthy .
    • All ordered goods are shipped and all services are performed by dates that are agreeable to both parties .
    • All shipped goods are authorized and accurately billed within the proper accounting period .
    • All sales returns and allowances are authorized and accurately recorded and based on actual returns of goods .
    • All cash receipts are recorded completely and accurately .
    • All credit sales and cash receipts transactions are posted to proper customers accounts in the accounts receivable ledger
    • All accounting records , merchandise inventory , and cash are safeguarded .
internal control29
INTERNAL CONTROL
  • General controls concerning the sale revenue cycle can be categorized as :
        • Organizational controls
        • Documentation controls
        • Asset accountability controls
        • Management practices control
        • Data center operations controls
        • Authorizations controls
        • Access controls
references
References
  • CORE CONCEPT OF ACCOUNTING INFORMATION SYSTEM

STEPHEN MOSCOVE , MARK SIMKIN , NANCY BAGRANOFF

EIGHTH EDITION

  • ACCOUNTING INFORMATION SYSTEMS , JAMES A.HALL

INTERNATIONAL STUDENT FORTH EDITION

  • ACCOUNTING INFORMATION SYSTEMS(ESSENTIAL CONCEPTS AND APPLICATIONS ) , WILKINSON , CERULLO , RAVEL , WONG-ONE-WING , FOURTH EDITION
  • ACCOUNTING INFORMATION SYSTEMS(ESSENTIAL CONCEPTS AND APPLICATIONS ) , JOSEPH W. WILKINSON , MICHAEL J. CERULLO , THIRD EDETION