revenue cycle

what is the revenue cycle

The revenue cycle, also known as the order-to-cash cycle, is the recurring set of business activities and data processing operations

associated with selling goods and services in exchange for cash or a future

promise to receive cash.

The revenue cycle’s primary objective is to provide the right product in the right place at the right time for the right price.

what are the 4 basic revenue cycle activities

1. Sales order entry.

2. Shipping.

3. Billing.

4. Cash collections

what are the 3 steps for the sales order entry process

1. taking the customer’s order

2. checking and approving customer credit

3. and checking inventory availability

are most business to business sales cash or credit?

most are credit

what is a credit limit?

The maximum allowable credit account balance for each customer, based on past credit history and ability to pay.

what is an accounts receivable aging report

a report that shows credit history. if they paid, how long it took them to pay, etc

what is a picking ticket?

a document that lists the irans and quantities ordered by the customer.

authorizes inventory control to release merchandise to shipping

picking ticket orders the inventory by how it is stored in the warehouse (to make it more efficient)

what is a bill of lading?

is a legal contract that outlines the carrier, source, destination, any special shipping instructions, and who is responsible for shipping fees.

what is a sales invoice

a document notifying customers of the amount of sale and where to send payment

what is the difference between the open invoice method and the balance forward method

open invoice: customers pay invoice to invoice

balance forward: customers pay for the month

what is cycle billing?

Producing monthly statements for subsets of customers at different times.

For example, each week monthly statements would be prepared for one-fourth of the customers

what is a credit memo

document showing how much money should the customer get back (in context of sales returns, or damaged items)

also is used to write off uncollectible account

what is a remittance list

A document listing names and amounts of all customer payments received in the mail.

(to help with theft)

what is factoring

selling accounts receivable at a disc b one to a firm that specializes in collections of past-due accounts