Post-Sale processes

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Post-Sale processes

(special thanks to Geoff Leese)

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Objectives

At the end of this lecture you should be able to…

List the main functions of a Sales department

Explain some of the problems associated with sales.

List the documents associated with sales Describe the information flow within a

Sales Department.

These objectives relate to LO 1 – Concepts, theories and principles related to the use of computing in business, and Indicative content – Functional areas of business, marketing sales and production etc. and Sales Order Processing

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Cash, Credit or both?

A cash only business asks for payment at the point of sale – e.g. Tesco

A credit business operates on accounts, and allows customers a period – usually 30 days – before payment.

Some businesses allow both – e.g. B&Q are mainly cash, but allow account customers to buy on credit.

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Cash Sales

Cash might mean £ and pence Cash also includes plastic…. In this

case the cash payment is made by the card company, and they allow their customer the credit.

Using credit cards costs money – the card company has overheads!

The retailer pays - generally 2.5% but can be more – 4 or 5%

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Example You buy and item from GladRags

costing £100, and pay by credit card. Card charges 2.5% - or £2.50, so

GladRags gets £97.50. (Annual t/o £1m ?)

If you don’t pay off all your credit card, they will also charge you interest – so they make money both ways!

So – why do companies take card payments?

Are debit (switch) cards the same?

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Credit Sales Mean your customers have an account. You need references – bank, other businesses. Takes time to set up Need to decide on credit limit, payment terms

etc. Needs administration – often called credit

control Customers expect regular statements You don’t get your money for 30 days You need to finance all your costs until

payment. Why bother? Could you do business without it?

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Both….

Doesn’t pay to set up credit for small amounts.

Looking to catch large / regular customers

May need to offer attractive terms, or discounts

May not advertise different prices – bad for customer relations!

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Centralisation

Large companies with multiple branches often have one centralised credit control centre

E.g Mavis Gerkins – local builders merchant, approx 1900 depots in UK, Credit controlled in Nottingham centre, employs >100 staff.

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So - let’s sell something on credit

Customer wants to open an account – form sent

Credit checking – references etc. Account approved – terms set Order placed - may be telephone,

internet, order form etc. Usually has customer reference number.

Order recorded, passed to despatch.

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Despatch prepare the order for delivery, may be all, or if some items out of stock, part of total ordered.

Despatch tell Sales what they have sent. Sales prepare the invoice – based on what has

been delivered The balance of the order is recorded, for when

the items are available. Cycle repeated for all orders Monthly statements are sent Payments are received, and allocated to

accounts Invoices in excess of 30 days have to be chased.

So - let’s sell something on credit

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A Typical Process Model….

• First list your elements…

• Then assemble your model…

Data StoreData FlowProcessExternal Entity

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Set up new accounts

Customer

Receive +Check Orders

Referees

Despatch goods

Customer Details

Stock Records

Despatches

S Invoices

Credit Notes

Prepare Invoices

Credit NotesStatements

Customer

ReceivePayments

Orders

Payments

The Sales Ledger?

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Check you know… (next lecture)

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What does the IT system do for the Sales Dept?

• Most companies have a computerised system where the Sales Ledger is integrated with the stock records.

• Holds customer records – account details, delivery address etc.• Holds copies of orders received • Checks orders against credit limit – can block ‘bad’ accounts• Allows despatch notes to be matched against orders• Automatically updates stock with items sent• Produces & records Invoices• Hold records of all transactions on each account – invoices, credit

notes, payments etc. • Produces monthly statements• Allows payments to be matched to account• Identifies overdue invoices• Can produce management reports – routine and ad-hoc.

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Sales Order Processing

Refines the ordering process Orders can be confirmed immediately, as credit

and stock levels can be accessed on-line Eliminates part orders, can offer alternatives Instant access to account history for all queries Generates automatic invoice and despatch

notes Can accept 3rd party payment Can be telephone or more and more web based. Web – are customers doing the work? Look at ‘ticketless’ airlines – how much work is

customer doing?

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Payment Fraud

How big is the problem? Who is responsible? What steps can be taken?

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Telesales – curse or blessing?

Computerised databases - can be bought

Automated calling - saves operator Pre-written dialogue Recorded for follow ups Unscrupulous use – bogus prizes etc. Is there an way to opt out?

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Ask yourself… What are the essential steps in processing a

sales order What are the problems of part fulfilled orders When are credit notes issued Give 3 advantages and 3 disadvantages of credit

sales Why do large companies usually centralise their

credit control departments Why do most large retailers accept credit card

payment Why do some firms refuse credit cards but

accept debit cards? Give some advantages and disadvantages of

selling goods on-line.

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Payment Processing

All business transactions are accompanied by a document that forms the basis of ‘double entry bookkeeping’

Most transactions are related to the sale or purchase of goods, services, capital items and consumables

So far we have concentrated on pre sale processes today we will look at what happens after the sale

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The order is placed

The receipt of goods is recorded

A refund is requestedIf there is a problem

Payment is made

BUYER SELLER

The order is received

The goods are supplied

Payment is requested

A refund may be agreed

Payment is requested again

The money is received

Purchase order

Delivery note

Invoice

Credit note

Statement of account

Remittance advice

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Invoice

Tells the buyer how much is owed

Sent by seller of goods Kept by buyer of goods Contains

Address of sellerAddress where invoice is sentWhere the goods were sent toReference number

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Conclusion

This presentation has considered the documents that are produced and used to support the post sale processes.

Useful web sites:Creditcontrol.co.uk (Nov 08)Bizhelp24.com (Nov 08)