I.C : Sales cycle

Question 1

Objectives of sales cycles

Answer 1

1. To ensure orders are only accepted if goods are available in stores or to be processed for customers
2. To ensure all orders are recorded completely and accurately.
3. To ensure all income receipts for sales are recorded completely.
4. To ensure goods are dispatched for all orders on a timely basis.
5. To ensure all goods dispatched are invoiced correctly using the the authorized price list.
6. To ensure goods are dispatched correctly to the customers and are of adequate quantity and quality
7. To goods are not sold to customers with poor credit risks.
8. To ensure discounts are authorised and given to valid customers.

Question 2

Step 1 in Sales cycle

Answer 2

• A sales order is generated which must be sequentially pre-numbered and should be of min. 3 copies.
• The 1st copy lies with the sales dept. ; the second copy goes to the customer and the 3rd copy goes to the warehouse.
• Availability of product must be checked within stores before confirming acceptance
• Also, the creditworthiness of customers must be assessed before allowing credit and deciding how much credit to give and the terms of the credit.
• Then sale dept. should communicate with the purchaser and send confirmation.

Question 3

Step 2 in Sales cycle

Answer 3

GOODS ARE DISPATCHED :

1. A GDN will be raised and needs to be sequentially pre-numbered and should be a min. of 3 copies: one copy goes to warehouse; 2nd copy to customer and 3rd copy to accounts dept.
2. The warehouse manager will have to sign the GDN after performing quantity and quality checks.
3. The GDN will be sent along with the goods to the customer and the customer has to sign the GDN to confirm they received the right quantity and quality of goods.
4. One copy of the GDN must be kept with the customer and the other copy must be sent back to the warehouse to confirm the goods have been delivered correctly to the customers.

Question 4

Step 3 in Sales cycle

Answer 4

RAISE SALES INVOICE:

1. Accounts dept. will raise the sales invoice which must be sequentially pre-numbered and min. of 3 copies (customer, sales dept. and accounts dept.).
2. Match sales invoice with GDN
3. Prepare invoice using the authorised price list which should be annually updated.
4. Perform arithmetic checks on invoices
5. Perform a sequence check to identify any missing gaps in the sequence and to ensure all GDNs have been invoiced.
6. Perform a sequence check on invoices to ensure all invoices raised have been recorded completely in the system.
7. Send customer statements on a monthly basis to identify any errors and to resolve disputed invoices on a timely basis.
8. Reconcile the sales ledger control account to the individual ledger to identify any errors and have it reviewed by a senior official and have the review evidenced by signature and date.
9. Discounts should be authorised by a senior personnel before offering to customers.

Question 5

Step 4 in Sales cycle

Answer 5

Receive payment from customer:

1. Match payment received to sale invoices.
2. Encourage bank transfers
3. have segregation of duties in place where one employee receives the payment and stores it in a secure location and the other employee records the payment received.
4. Perform bank reconciliation on a monthly basis.
5. Check validity of discounts availed by customers