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Chapter 8. The Sales/Collection Business Process. Chapter Learning Objectives. Identify activities and documents common to sales/collection business processes for various enterprises Recognize similarities and differences between different types of revenue-generating enterprises
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Chapter 8 The Sales/Collection Business Process
Chapter Learning Objectives • Identify activities and documents common to sales/collection business processes for various enterprises • Recognize similarities and differences between different types of revenue-generating enterprises • Identify the components of the REA ontology in the sales/collection business process • Explain how the sales/collection business process fits into an enterprise’s value system • Explain how the sales/collection business process fits into an enterprise’s value chain • Create a REA business process level model for an enterprise’s sales/collection business process • Create queries to meet common information needs in the sales/collection process
Sales/Collection Business Process in Enterprise Value Chains
Sales/Collection Process Events • Instigation Events in the Revenue Cycle • May be internally instigated (marketing events such as sales calls, advertising campaigns, or promotions) • May be externally instigated (customer inquiries) • Internal agents involved in revenue cycle instigation events usually are sales/marketing personnel or customer service representatives • External agents involved in revenue cycle instigation events usually are customers • Typically there is no need to specifically identify a good or service for purposes of instigation events; information about the type of good or service promoted is usually sufficient
Customer Inquiry Event • An instigation event that is externally initiated; typically involves a customer contacting the enterprise, either via telephone, e-mail, or in person, to inquire as to the pricing and availability of products or services • Data is not typically captured for this event; the customer’s questions are answered and if the customer does not immediately place an order, the customer may be added to a sales representative’s list of future sales calls. • If data were to be captured, it would be similar to the data captured for sales calls
Sales Call Event • An instigation event that is internally initiated; typically involves a sales representative calling on a customer, either via telephone or in person, to describe the features of one or more products or services • Is usually symbolized by a sales call report document or data entry screen that summarizes information about this event (e.g., which sales representative(s) and customer(s) participated, date, start time, end time, location, what products and/or services were presented to the customer and what the customer reactions were to those products/services, etc.)
Sales/Collection Process Events • Mutual Commitment Events in the Revenue Cycle • Involve the enterprise and an external business partner agreeing to exchange resources at a defined future time • Don’t always happen at a discrete point in time; often involves a series of activities • Internal agents are usually sales or customer service representatives and/or order entry clerks who assist the customer and collect the order data • External agents usually are customers • Typically there is no need to specifically identify a good or service for purposes of mutual commitment events; information about the type of good or service promoted is usually sufficient • Ideally enterprises would like to be able to trace mutual commitment events to the instigation events that triggered them
Sale Order Event • A mutual commitment event whereby the enterprise agrees to deliver goods to a customer and that customer agrees to pay an ascertained price for those goods • Is usually symbolized by a sale order document or data entry screen that summarizes information about this event (e.g., order date, promised delivery date, payment terms, dollar amount, which sales representative(s) and customer(s) participated, what products the customer ordered, etc.)
Rental Contract Event • A mutual commitment event whereby the enterprise agrees to transfer possession of a product to a customer for a defined time period and bestows on that customer the right to use the product for a prescribed purpose and in exchange the customer agrees to pay an ascertained price • Is usually symbolized by a rental contract document that summarizes information about this agreement (e.g. contract date, dollar amount, product(s) to be rented, time period for which each product is to be in customer’s possession, payment terms, which sales representative(s) and customer(s) participated, etc.)
Service Contract Event • A mutual commitment event whereby the enterprise agrees to perform one or more services for a customer during a defined time period for an agreed upon price and in exchange the customer agrees to pay an ascertained price • Is usually symbolized by a service contract document that summarizes information about this agreement (e.g. contract date, dollar amount, service(s) to be provided by enterprise, time period during which service(s) will be performed, payment terms, which sales representative(s) and customer(s) participated, which employees or types of employees will perform the services, etc.)
Sales/Collection Process Events • Economic Decrement Events in the Revenue Cycle • Represent the revenue generating activities; the giving up of one or more resources in order to get some other resource (usually cash) • Do not always happen at discrete points in time; may involve a series of workflow activities (e.g. picking, packing, shipping, and so on) • Resources vary for different types of businesses • Inventory (Inventory type may substitute for Inventory), Labor (Service Type may substitute for Labor), Temporary use of asset (as in a rental) • Internal Agents are typically salespeople, shipping clerks, delivery clerks, and service engagement personnel • External Agents are typically customers or clients
Sale Event • An economic decrement event in which title (ownership) of one or more products is transferred from the enterprise to a customer. The transfer may take place in person (e.g. a sale of a t-shirt at a campus bookstore) or in transit (e.g. a shipment of a video game from an enterprise with a web-based storefront) • Is usually symbolized by a bill of sale, sale invoice, or similar document (or data entry screen) that summarizes information about the title transfer (e.g. date, dollar amount, product(s) for which title transferred, payment terms, which sales representative(s) and customer(s) participated, etc.) • Sales that occur via transit are usually also symbolized by a packing list (which lists quantities of specific products shipped) and a bill of lading (which indicates the number, dimensions, and weight of packages in which products were shipped)
Rental Event • An economic decrement event in which possession of one or more products is transferred from an enterprise to a customer for an agreed upon length of time for an agreed upon purpose and price • Usually occurs over an extended period of time, rather than occurring at a single point in time • Is usually symbolized by documents or data entry screens that summarize information about the transfer of possession of products to the customer and then the return of products to the enterprise (e.g. dates, times, which products, rental agent, and customers were involved, etc.)
Service Engagement Event • An economic decrement event in which one or more agents of the enterprise provide one or more types of service to a customer • May occur over an extended period of time, or may be performed at a point in time • Is usually symbolized by service invoice or similar documents or data entry screens that indicate the services have been performed and summarize information about the performance (e.g. date(s), time(s), types of service performed, which employee performed the service(s), for which customer, possibly some notes made by the employee about the service, etc.)
Sales/Collection Process Events • Economic Increment Events in the Revenue Cycle • Almost always is a Cash Receipt event • An economic increment event in which an external agent transfers ownership of cash (or a cash equivalent) to the enterprise • Is usually symbolized by a remittance advice document or data entry screen that summarizes information about the event (e.g. date, dollar amount, customer from whom cash was received, employee who processed the cash receipt, sale or other revenue generating activity to which cash receipt applied, etc.) • Resource is typically cash (a type-level resource – usually a listing of cash accounts owned by the enterprise) • Internal agents are usually cashiers, accounts receivable clerks, or other financing personnel • External agents are usually customers or clients
Sales/Collection Process Events • Economic Decrement Reversal Events • Events in which previous economic decrement events are reversed or negated • Although similar in mechanics, such events are inherently different from economic increment events • Getting something back that you were happy you had given up (and for which you now have to give back the thing you were originally happy to get) is not the same as getting something you wanted to get in exchange for giving up something you were willing to give up • Resources, Internal Agents, and External Agents are the same as those for economic decrement events
Sale Return Event • An economic event in which title (ownership) for products that were previously transferred from seller to buyer is transferred back from buyer to seller • Although a resource (or resource type) is increased as a result, the nature of sale returns is different than other economic increment events, I.e., it isn’t generally viewed as a desirable result. The substance of the event is such that the original economic decrement is negated. Thus, we label such events as economic decrement-reversal events. • Is usually symbolized by sales return authorization, receiving report and credit memo documents or data entry screens that summarize information about the event (e.g. date, what quantities of which products were received from customer; dollar amount, which customer is involved, which employee processed return, etc.)
Sales/Collection Process Relationships • Fulfillment relationships • Between Marketing, Sales Call, or Customer Inquiryand Sale Orderevents • Between Sale Orderand Sale(or Rental or Service engagement) events • Duality relationships • Between Sale (or Rental or Service engagement) and Cash Receipt (or Receipt of Bartered Goods/Services) events • Reversal relationships • Between Sale and Sale Return events • Participation relationships • Between each event and each internal and external agent
Sales/Collection Process Relationships • Proposition relationships • Between Marketing, Sales Call, or Customer Inquiry event and Inventory (or Inventory Type or Service Type) • Reservation relationships • Between Sale Order, Rental Contract, or Service Contract and Inventory (or Inventory Type or Service Type) • Also between Sale Order, Rental Contract, or Service Contract and Cash • Stock flow relationships • Between Sale (or Rental or Service Engagement) and Inventory (or Inventory Type or Service Type) • Between Sale Return and Inventory (or Inventory Type) • Between Cash and Cash Receipt
Resource Query Types • Detailed status information at one or more points in time for each resource instance • Detailed status information at one or more points in time for only those resource instances meeting specified criteria • Summarized status information at one or more points in time for all resource instances • Summarized status information at one or more points in time for only those resource instances meeting specified criteria
Revenue Cycle Resource Queries • A list of each inventory item or item type offered for sale by an enterprise • A list of all inventory items or item types that possess certain characteristics • (e.g. all books, real estate listings with lake frontage, toys with selling prices within a certain range, video games in GameBoy Advance format, preventive dental care services, etc.) • Quantity on hand of an inventory item type as of a specified date • Total cost value of inventory on hand as of a specified date • A list of all cash accounts owned by an enterprise as of a specified date • Balance in a specific cash account as of a specified date • Total balance in all cash accounts as of a specified date
Example Resource Type Query SELECT Description, UnitOfMeasure, ListPrice FROM InventoryType WHERE ListPrice < 70;
Example Resource Type Query SELECT *FROM CashWHERE DateAccountEstablished < April 20, 2010;
Event Query Types • Detailed information about each event instance • e.g., what happened, when and where did it happen, etc. • Detailed information about each event instance that meets specified criteria • e.g. events of a specified type that occurred during a specified time period or that occurred at a specified location • Summarized information for all instances of an event type for a specified time period • e.g. total of the event instances during a specified time period • Summarized information for only those instances of an event type for a specified time period that meet specified criteria • e.g. average dollar value of the event instances for a specified location during a specified time period
Revenue Cycle Event Queries • Location of a sales call • Total number of sales calls, sale orders, sales, etc., that occurred at a specified location or during a specified time period • Total dollar amount for a specific sale order, sale, cash receipt, or sale return • Total or average dollar amount of all sale orders, sales, cash receipts, or sale returns for one or more specified time periods • Total or average dollar amount of sale orders, sales, cash receipts, or sale returns in a specific location for one or more specified time periods • Sales tax applicable to a specified sale event • Shipper’s tracking number for a shipment sale event • Date a sale event occurred • Length of a sales call (end time minus start time)
Query to identify date and location of Sales Call #44 Which relational algebra operators apply? Which table(s) do we need? Project, Select What is SQL statement? What is Access QBE? SELECT SalesCallID, Date, Location FROM SalesCall WHERE SalesCallID=44; What is the result?
Sales for a specified time period (e.g. for an income statement) Which relational algebra operators apply? Which table(s) do we need? Project, Select What is SQL statement? What is Access QBE? SELECT Sum(DollarTotal) FROM Sale WHERE Date BETWEEN 5/1/2010 AND 5/7/2010; What is the result?
Agent Query Types • Detailed status information at one or more points in time for each agent instance • Detailed status information at one or more points in time for only those agent instances meeting specified criteria • Summarized status information at one or more points in time for all agent instances • Summarized status information at one or more points in time for only those agent instances meeting specified criteria
Revenue Cycle Agent Queries • A list of all salespeople, cashiers, inventory clerks, or credit managers for an enterprise • A list of all employees that possess certain characteristics • e.g. all waiters and waitresses who are at least 21 years old, all staff auditors who have passed the CPA exam, all salespeople whose pay is commission-based, etc.
Identify Customers with Credit Rating of “A” or “A+” Which table(s) do we need? Which relational algebra operators apply? Select What is SQL statement? What is Access QBE? SELECT * FROM Customer WHERE CreditRating=A OR CreditRating=A+; What is the result?
