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Revenue Accounting Success Story

Revenue Accounting Success Story. AIRLINE OVERVIEW. Please visit our Web Site: Goss & Associates, LLC. Started operations in the 1960’s Based in the Pacific Served 25 Cities 1,500+ Employees. Fleet. Operated 29 Aircraft Aircraft mix included B747, DC10, B757, B727 & B737.

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Revenue Accounting Success Story

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  1. Revenue Accounting Success Story

  2. AIRLINE OVERVIEW Please visit our Web Site:Goss & Associates, LLC

  3. Started operations in the 1960’s • Based in the Pacific • Served 25 Cities • 1,500+ Employees

  4. Fleet • Operated 29 Aircraft • Aircraft mix included B747, DC10, B757, B727 & B737

  5. AIRLINE’SREVENUE ACCOUNTING OVERVIEW Please visit our Web Site:Goss & Associates, LLC

  6. Annually the airline processed an average of - 2.5 million flight coupons- 1.5 million audit coupon • Five Computer Reservation Systems (CRS) processed 95% of the airline’s sales • Flight coupons were used an average of 7 to 12 days after sale

  7. Airline used a sales based accounting process • Airline had unprocessed sales backlog -12 plus months • At month end, the airline experienced unmatched flight coupons ranging between 90% and 95% • Airline’s revenue accounting balance sheet accounts were not reconciled

  8. 80% of airline’s revenue was net of both first and second level commission • First level is defined as traditional commission • Second level is defined as volume incentive • Airline’s sales based process provided coupon level revenue information

  9. PROBLEM DEFINITION Please visit our Web Site:Goss & Associates, LLC

  10. Conflicting internal opinions regarding:- Staff size - Automation- Departmental management competency • Needed independent expertise to:- Evaluate current situation- Provide facts- Recommend actions

  11. Given their ticket volume, more process staff was required to operate the current system: • Maintain current volumes • Audit sales to recover under collected sales • Audit to recover over paid commission • Reconcile balance sheet accounts

  12. Long term, the airline needed to invest in automation to: • Reduce staff and human errors • Recover under collected sales through fare audits • Recover over paid commission through audits • Reconcile balance sheet accounts

  13. In addition, investment in automation was needed to: • Improve commission tracking • Simplify payment process • Take revenue data to segment level

  14. ACTION PLAN Please visit our Web Site:Goss & Associates, LLC

  15. Eliminate BACKLOGS: • Sales • Account Reconciliation • Invest in automation • Reengineer revenue accounting process

  16. ELIMINATE BACKLOGSGetting Revenue Accounting Current

  17. Outsourcing was used to: • Maintain current revenue accounting process • Eliminate sales processing BACKLOGS • Data enter unprocessed sales reports • Capture unprocessed BSP long sale files • Account reconciliation using technical revenue accounting experience

  18. AUTOMATEInvesting in Revenue Accounting

  19. Found a Revenue Information System that used all 5 Computer Reservation Systems: • Audits fares and commissions • Reduces staff requirements • Feeds revenue data to other systems • Receives data from other system providers like ATPCO and other airlines

  20. PROCESS REENGINERINGReinventing Revenue Accounting

  21. The reengineered revenue information process provided: • Current technical revenue accounting skills • Revenue Analysis • Efficient processing of documents and data • Reduced process staff and increased analytical staff

  22. Revenue Accounting’s Future Please visit our Web Site:Goss & Associates, LLC

  23. Commit to constant vigil • Commitment to improve process automation • Insure revenue accounting continues to be: • Cost efficient • A complete information provider • Never backlogged

  24. Revenue Accounting Success Story Please visit our Web Site:Goss & Associates, LLC

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