Week 7 - Revenue Cycle Flashcards
What is the revenue cycle?
- Known as “order to cash”.
- Includes all events that are involved in the exchange of goods and services with customers, including the collection of payment for those goods and services.
What does order mean in the revenue cycle?
Involves sales order processing and picking, packing and shipping the ordered goods.
What does cash mean in the revenue cycle?
Its about billing/creating invoice and
recording cash receipts or customer payment.
What is a customer order?
- A source document
- Allows customers to order goods from the organisation.
- Form can be either a customer’s purchase order prepared by a customer or a customer order form prepared by a salesperson in the sales unit.
What is an order acknowledgement?
- A source document
- A confirmation sent to the customer to let them know that their order has been received.
- Often prepared by a salesperson who receives the customer’s order form (or purchase order form).
What is a credit application?
- Source document
- A form that is prepared for a new customer applying for credit.
- The form shows the customer’s financial position and the customer’s ability to repay any debts owing.
What is a sales order?
- Source document
- Formal document that is prepared using the customer order form.
- Multiple copies of the document are also prepared to initiate shipment and receive payments from customers.
- Prepared by salesperson in the sales unit.
What is a goods packing slip?
A document generated by the shipping officer in the logistics unit and attached to the goods sent to the customer.
What is a bill of lading?
- A document that is prepared for the common carriers that transport the goods to the customer.
- Prepared by the shipping officer in the logistics unit.
What is a shipping notice?
- A document that tells the customer what goods, in what quantity have been shipped.
- Generated by the shipping officer.
- Copy of the sales order form may act as a shipping notice.
What is a sales invoice?
- This document is sent to the customer in respect of the goods that he or she has purchased and shows the amount of sales.
- The billing officer in the finance or accounting units prepares this document.
What is remittance advice?
- A document that shows the cash receipts from a customer.
- May be prepared by finance or accounting unit and attached as a stub to the sales invoice.
- Customer returns this stub with the necessary payment to the finance or accounting unit.
- Customer may send RA informing the finance/accounting unit of the nature of the payment.
What is a customer service log?
A document that is used by customer service personnel in the marketing unit to record customer enquiries and the necessary actions (if any) undertaken to address the customer’s queries or concerns.
What are the strategic objectives of the revenue cycle?
- Organisations aim to be profitable and achieve positive cash flows.
- High sales (as it affects all other activities within the organisation)
- A well controlled cycle providing a competitive advantage through superior customer service.
What technologies underpin the revenue cycle?
- ERP (Enterprise Resource Planning):
- Improves the integration of enterprise-wide data.
- Provides tighter linkages between relevant modules (sales, marketing, etc). - EDI (Electronic Data Interchange):
- Enables the exchange of data between two separate computer systems. - XML (EXtensible Markup Language):
- Used for online sales sites to provide efficient data exchange. - CRM (Customer Relationship Management):
- Improves understanding of customers and their interaction with the organisation.
- Typically store historical revenue data by customer.
- Uses technology to: reduce errors in data entry (barecode scanners), improve transparency in banking (BPAY).
