The Sales Cycle

8/2/2019 The Sales Cycle

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WHAT ARE INTERNALCONTROLS?

THEY ARE CONTROL ACTIVITIESDESIGNED TO GIVE REASONABLEASSURANCE REGARDING THEACHIEVEMENT OF OBJECTIVES RELATINGTO:

1. EFFICIENCY AND EFFECTIVENESS OFOPERATIONS

2. RELIABLE REPORTING3. COMPLIANCE WITH LAWS AND

REGULATIONS


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EFFICIENCY AND EFFECTIVENESSOF OPERATIONS:

1. Efficient operations efficient operations

achieve or surpass corporate economyobjectives

2. Effective operations effective

operations are in accordance withobjectives, plans and laid downprocesses or exceed expectations


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Control Activities

These are the detailed processes andprocedures that manage risks at abusiness and reporting level. They include

management information systems,management structures, the use ofauthorisation, internal check and

segregation of duties, accounting and ITcontrols over processing, quality controlsand health and safety routines.


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RELIABLE REPORTING:

1. Annual reportThe published chairmansstatement, directors report and operating and

financial review.2. Financial statements The income statement,

statement of position, equity changes,accounting policies and notes

3. Market disclosure and transparency Theother communications required to ensure thatthere are no false markets in securities


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COMPLIANCE WITH LAWS ANDREGULATIONS:

1. People Including recruitment, selection,promotion, working conditions etc

2. Products Including copyright, safety,standards etc

3. Processes Including health and safety,standards etc


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PREVENTION AND DETECTION OFFRAUD AND ERROR

1. FRAUD Fraud includes deliberatedeception and embraces, for example,theft, false accounting and bribery.

2. ERROR Errors are unintentionalmisstatements.


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THE SALES CYCLEINVENTORY CONTROL

MARKETING

ENQUIRIES

CUSTOMER CREDIT EVALUATION

ORDERINGORDER CONFIRMATION

DESPATCH

INVOICING

STATEMENT

CASH COLLECTION

CREDIT CONTROL

BAD DEBTS


9/18

INVENTORY CONTROL

Companies need to keep adequate but not excessiveinventories. An investment in inventory is a cost but astock-out and failure to satisfy a customer is also a cost.Inventories as a physical asset also need to be secure.Companies may use a stock control model to set levels,

safety levels, reorder levels and reorder quantities ofinventories. General review and more detailed analysisof inventory movements will be required to keep themodel current. Where just-in-time approaches are usedinventory levels will be minimised and effective business

and IT processes will be required to forecastrequirements, handle variations and to pass data andinformation back through automated order processesand into supplier databases.


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MARKETING

Marketing activities are vital in the valuechain in delivering value to customers andmargin to shareholders. Decisions on

products, the product portfolio, prices,placement of products and promotion ofproducts need to be subject to

management control and authorisation.


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ENQUIRIES

Customer enquiries may need to belogged to build up a marketing database.The enquiries may also then be subject to

follow-up procedures


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ORDERING

Prices, products and specifications needto be agreed and authorised along withterms and conditions. With existing

customers credit checks will be linked tothe customer account system. Newcustomers will have separate checks. No

order should be accepted until goods areknown to be available or in process andonly after satisfactory credit approval.


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ORDER CONFIRMATION

To ensure proper agreement ofspecifications, prices, delivery schedulesand terms and conditions customers will

be requested to confirm accepted orders.


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CUSTOMER CREDITEVALUATION

Where goods are sold on new customersshould be subject to appropriate creditchecks using agencies, references or in

some cases the use of deposits and directdebits. Credit limits may need to be set up.Credit arrangements need to be subject to

authorisation.


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DESPATCH

It is essential to have controls in place toensure that goods are not despatchedwhere there is an unacceptable credit risk.

Checks should also ensure the correctgoods and quantity are despatched inaccordance with the order.


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INVOICING

Whenever there is a despatch of goodsthere should be an invoice verified for thecorrect goods as despatched and ordered

and at the right price.


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Cash collection

Statements should be sent to creditcustomers as a reminder and collectionprocesses should be in place to chase for

prompt payment. Internal controls will berequired to ensure prompt banking intactof all monies received.


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CREDIT CONTROL

Regular review of outstanding invoices isrequired with processes to chase andenforce payment.

The Sales Cycle

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Transcript of The Sales Cycle