The Sale Cycle & Documents

Question 1

In order if the flow of information describe what a typical sales cycle looks like?

Answer 1

1. Customer requests a quote
2. Order placed by customer
3. Goods delivered to customer
4. Invoice raised for goods that were delivered
5. Payment received from customer

Question 2

The Sale Cycle & Documents

Complete these sentences:

At each stage of this process ______________ will be prepared and a __________ will be kept.

This _____________ forms the starting point of what is known as the ___________ of _____________.

Answer 2

At each stage of this process documentation will be prepared and a record will be kept.

This documentation forms the starting point of what is known as the flow of information.

Question 3

What is the definition of Cash Sales?

Answer 3

A cash sale is settled immediately by the customer.

Not necessarily mean paid in actual notes and coins.

Checks and using debit or credit cards would be a cash transaction.

Sales made by businesses to individuals are often on a cash basis.

Question 4

What is the definition of Credit Sales?

Answer 4

Customer is given a period of time before they have to pay for what they have bought.

Transactions are settled at a later date.

Usually businesses give customers 30 or 60 days credit.

Carries a higher risk that the customer may take a long time to pay or not pay at all.

Sales by business to other businesses are often made on credit.

Question 5

Match the associated documents with their step in the sale cycle:

delivery note, invoice/credit note, sales order, remittance advice, quotation

1.
2.
3.
4.
5.

Answer 5

1. Quotation
2. Sales order
3. Delivery note
4. Invoice/credit note
5. Remittance advice

Question 6

What information should be included on a quotation?

Answer 6

Title and description of goods/service to be supplied.

Price including any potential discount for bulk orders or prompt payment.

Terms and conditions which will relate to the sale.

Question 7

The Sale Cycle & Documents

Complete the following sentences:

Quotations may only be valid for a _________ amount of time.

If a customer tried to insist you sold them goods at a price you quoted _____ ________ _____ you would ______ have to honour that price.

Answer 7

Quotations may only be valid for a certain amount of time if a customer tried to insist you sold them goods at a price you quoted several years ago you would not have to honour that price.

Question 8

The Sale Cycle & Documents

Complete the following sentence:

If the _____ is acceptable then the _______ department will raise an order (______ order) this will be the start of the process of supplying goods to their ______.

Answer 8

If the quote is acceptable then the purchase department will raise an order (sales order) this will be the start of the process of supplying goods to their customer.

Question 9

The Sale Cycle & Documents

Complete this sentence:

The sales _____ will communicate the _____ and type of _____ required the agreed _____ price and ______ value and may give additional _______ on specific design or _______ requirements that the customer has

Answer 9

The sales order will communicate the quantity and type of goods required the agreed unit price and total value and may give additional information on specific design or delivery requirements that the customer has

Question 10

The Sale Cycle & Documents

Complete this sentence:

A delivery ______ is an important document signed by the _________ on delivery it is proof that the __________ has received the goods and proof of _________ of the _______ and ______ of goods therefore shows _______ for the customer to _____ for them

Answer 10

A delivery note is an important document signed by the customer on delivery it is proof that the customer has received the goods and proof of acceptance of the quantity and quality of goods therefore shows liability for the customer to pay for them

Question 11

The Sale Cycle & Documents

Complete this sentence:

Usually delivery ________ come in _______ copies (sometimes different _______) ______ copy remains with the ______ and one copy is returned to the _____

Answer 11

Usually delivery notes come in multiple copies (sometimes different colours) One copy remains with the customer and one copy is returned to the supplier

Question 12

The Sale Cycle & Documents

Complete this sentence:

On a delivery ______ no ______ details are included just _____ and ______ because the warehouse staff receiving and ______ the delivery are ____ likely to know what the _____ should be they are just counting units and checking the right ____ has been received.

Answer 12

On a delivery note no price details are included just descriptions and quantities because the warehouse staff receiving and checking the delivery are not likely to know what the price should be they are just counting units and checking the right product has been received.

Question 13

The Sale Cycle & Documents

Complete the sentences:

Once goods have been _________ to the customer A ______ copy of the _______ note is returned to the accounts department for the business that _______ the goods which indicates that the _______ invoice should now be raised.

An invoice is a request for _______ and the sales invoice is sent to the _________ to tell them that they need to pay for the ________ they received.

Answer 13

Once goods have been delivered to the customer A signed copy of the delivery note is returned to the accounts department for the business that supplied the goods which indicates that the sales invoice should now be raised.

An invoice is a request for payment and the sales invoice is sent to the customer to tell them that they need to pay for the delivery they received.

Question 14

The Sale Cycle & Documents

Complete this sentence:

Invoices will include details of goods _______ and _______ prices also total charged including any _______ charges and ______ it will also show details of any __________ terms agreed and how the payment should be made.

Answer 14

Invoices will include details of goods delivered and unit prices total charged including any delivery charges and VAT it will also show details of any payment terms agreed and how the payment should be made.

Question 15

The Sale Cycle & Documents

Complete this sentence:

An invoice is a document to request payment from a ______ it is also required by _______ registered ________ in order to _________ over or reclaim VAT from her majesty revenue and customs (HMRC)

Answer 15

An invoice is a document to request payment from a customer it is also required by VAT registered business in order to pay over or reclaim VAT from her majesties revenue and customs (HMRC)

Question 16

The Sale Cycle & Documents

For most transactions a full valid VAT invoice must be used

What information is included on the invoice?

Answer 16

Unique sequential invoice number

Sellers name and address

Sellers VAT number

Invoice date/time of supply (also known as tax point)

Customers name and address

Description of goods and services

Rate of any cash discount

Total amount of VAT

Total amount owing (including VAT)

Also for each item on the invoice …

Unit price or rate (excluding VAT)

Quantity of goods or extent of services

Rate of VAT

Total amount payable (excluding VAT)

Question 17

Why are invoices numbered in a sequential order?

Answer 17

Invoices are numbered in a sequential order because it means it is easier to spot any that are missing when they are being filed

Question 18

Complete this sentence:

There are a number of ______ which should be made before a ______ invoice is issued to the customer issuing an incorrect invoice to a customer can ______ the payment of an invoice as well as it being embarrassing

Answer 18

There are a number of checks which should be made before a sales invoice is issued to the customer issuing an incorrect invoice to a customer can delay the payment of an invoice as well as it being embarrassing

Question 19

What checks should be performed on a sales invoice before it is sent to a customer?

Answer 19

That the correct name and address of the customer are shown

That the description of the goods supplied and the quantity have been checked to the sales order and the delivery note

That the delivery note was signed by the customer (To show that they were happy with everything when it was delivered)

The invoice number and date are shown

Unit prices are as agreed on the quotation and sales order

All calculations are correct (including VAT)

Correct payment terms are displayed

Question 20

The Sale Cycle & Documents

Complete this sentence:

If ________ items are sent to a customer, or they are faulty, then the customer may _____ them.

The returned goods should be accompanied by a ________ ________ _______ which will give details of the _______ of items returned and the ______ for their return.

Answer 20

If incorrect items are sent to a customer, or they are faulty, then the customer may return them.

The returned goods should be accompanied by a goods return note which will give details of the quantity of items returned and the reason for their return.

Question 21

The Sale Cycle & Documents

Complete these sentences:

If a ______ invoice has already been issued to the customer for goods that have now been returned a _____ note will need to be issued

A ____ note is like a _____ invoice and ______ out part of (or all of) and invoice

When a customer comes to settle the _______ invoice they will _____ any related _______ note and pay the ______

Answer 21

If a sales invoice has already been issued to the customer for goods that have now been returned a credit note will need to be issued

A credit note is like a negative invoice and cancels out part of (or all of) and invoice

When a customer comes to settle the sales invoice they will deduct any related credit note and pay the difference

Question 22

The Sale Cycle & Documents

Complete this sentence:

Payment for invoices should be made by ________ customers before the invoice becomes ________ a payment may be made for a number of invoices at the same time so to make it clear what is being paid the customer will usually send a __________ __________ with the payment which will clearly detail the _______ that the payment relates to

Answer 22

Payment for invoices should be made by credit customers before the invoice becomes overdue a payment may be made for a number of invoices at the same time so to make it clear what is being paid the customer will usually send a remittance advice with the payment which will clearly detail the invoices that the payment relates to