Revenue Cycle Flashcards
Why is Revenue Cycle important?
Maintains a steady stream of income for our business, especially under situations in which cash flows are declining, margins are tightening and bad debts increasing
Which organisational units have primary responsibility for the revenue cycle?
Marketing, sales and finance
What is the revenue cycle?
A set of exchange transaction contracts associated with providing goods and services and collecting cash payment
The Objective of the revenue cycle
To provide the right product in the right place at the right time for the right price
conduct and monitor the sales of goods and services
arrange the supply of goods and services
ensure payment for goods and services
Links of the revenue cycle to other cycles
expenditure, human resources and general ledger cycle
4 basic business activities of the revenue cycle
- sales order entry
- shipping
- billing and accounts receivable
- cash collection
General threats to revenue cycle
- inaccurate master data
- unauthorised disclosure of sensitive information
- loss of master data
- poor performance
Controls to revenue cycle
- restrict access to master data
- encryption
- tokenization
- backup
- managerial reports
What are the steps of sales orders?
take customer orders
approve customer credit
check inventory availability
respond to customer enquiries
Threats to sales orders entry
incomplete orders invalid orders loss of customers excess inventory uncollectible accounts
What are the steps to shipping?
pick and pack
ship goods
Threats to shipping
picking the wrong item
theft
shipping errors
What are the steps to billing?
invoicing
update account receivable
Which units perform billing?
billing
accounts receivable
What are the steps to cash collection?
speed up receipt of payments
