2Chapter Learning Objectives Identify activities and documents common to sales/collection business processes for various enterprisesRecognize similarities and differences between different types of revenue-generating enterprisesIdentify the components of the REA ontology in the sales/collection business processExplain how the sales/collection business process fits into an enterprise’s value systemExplain how the sales/collection business process fits into an enterprise’s value chainCreate a REA business process level model for an enterprise’s sales/collection business processCreate queries to meet common information needs in the sales/collection process
3Sales/Collection Process in an Enterprise Value System
4Sales/Collection Business Process in Enterprise Value Chains
5REA Sales/Collection Business Process Level Pattern
6Sales/Collection Process Events Instigation Events in the Revenue CycleMarketing events – internally instigatedCustomer inquiries – externally instigatedResource - type
7Sales/Collection Process Events Mutual Commitment Events in the Revenue CycleInvolve the enterprise and an external business partner agreeing to exchange resources at a defined future timeInternal agents - sales or customer service representatives and/or order entry clerksExternal agents - customers
8Sales/Collection Process Events Economic Decrement Events in the Revenue CycleRepresent the revenue generating activitiesResources vary for different types of businessesInventory, Labor ,Temporary use of assetInternal Agents -- salespeople, shipping clerks, delivery clerks, and service engagement personnelExternal Agents -- customers or clients
9Sales/Collection Process Events Economic Increment Events in the Revenue CycleAlmost always is a Cash Receipt eventExternal agent transfers ownership of cash (or a cash equivalent) to the enterpriseResource is typically cashInternal agents -- cashiers, accounts receivable clerks, or other financing personnelExternal agents -- customers or clients
10Sales/Collection Process Events Economic Decrement Reversal EventsEvents in which previous economic decrement events are reversed or negatedAlthough similar in mechanics, such events are inherently different from economic increment eventsGetting 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 upResources, Internal Agents, and External Agents are the same as those for economic decrement events
11Sale Return EventTitle (ownership) for products that were previously transferred from seller to buyer is transferred back from buyer to sellerSymbolized by sales return authorization, receiving report and credit memo documents or data entry screens that summarize information about the event
12Sales/Collection Process Relationships Fulfillment relationshipsBetween Marketing, Sales Call, or Customer Inquiry and Sale Order eventsBetween Sale Order and Sale (or Rental or Service engagement) eventsDuality relationshipsBetween Sale (or Rental or Service engagement) and Cash Receipt (or Receipt of Bartered Goods/Services) eventsReversal relationshipsBetween Sale and Sale Return eventsParticipation relationshipsBetween each event and each internal and external agent
13Sales/Collection Process Relationships Proposition relationshipsBetween Marketing, Sales Call, or Customer Inquiry event and Inventory (or Inventory Type or Service Type)Reservation relationshipsBetween 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 CashStock flow relationshipsBetween 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
14Resource Query TypesDetailed status information at one or more points in time for each resource instanceDetailed status information at one or more points in time for only those resource instances meeting specified criteriaSummarized status information at one or more points in time for all resource instancesSummarized status information at one or more points in time for only those resource instances meeting specified criteria
15Event 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 criteriae.g. events of a specified type that occurred during a specified time period or that occurred at a specified locationSummarized information for all instances of an event type for a specified time periode.g. total of the event instances during a specified time periodSummarized information for only those instances of an event type for a specified time period that meet specified criteriae.g. average dollar value of the event instances for a specified location during a specified time period
16Agent Query TypesDetailed status information at one or more points in time for each agent instanceDetailed status information at one or more points in time for only those agent instances meeting specified criteriaSummarized status information at one or more points in time for all agent instancesSummarized status information at one or more points in time for only those agent instances meeting specified criteria
17Duality Relationship Query Types Identification as to whether a specified exchange is completedIdentification of completed exchanges for a specified time periodIdentification of incomplete exchanges for a specified time periodCalculation of the amount of claims, e.g. prepaid expenses, payables, unearned revenues, or receivables, either in total or for a specified exchange eventCalculation of the total or average length of the timing difference(s) between the events involved in one or more exchanges
18Accounts Receivable Query Steps ConceptuallyDollar value of sales or service engagements for which cash receipt has not yet occurred in full, adjusted for any sale returns and sale discounts.PracticallyTotal sales/service engagements through balance sheet date minus total cash receipts through balance sheet date that applied to sales/service engagements. Also subtract sales returns and discounts through balance sheet date.MUST include ONLY ending date constraint (balance sheet item reflects cumulative data from beginning of company through balance sheet date).Use sale/service engagement date to determine which revenues to include.Use cash receipt date and duality relationship to determine which cash receipts to include. Be sure to aggregate cash receipts that apply to same sale BEFORE subtracting from sale amountLikely need for outer join and Nz function in Access (for sales with no matching cash receiptsNote: Sales minus Cash receipts from Customers not acceptable (because you might get non-sale related CR from customers)
19Stockflow Relationship Query Types What resources or resource types were increased or decreased by an economic event?What quantity of a resource or resource type was increased or decreased by an economic event?What dollar value of a resource or resource type was increased or decreased by an economic event?When did an event increase or decrease a specific resource or resource type?Where did an event increase or decrease a specific resource or resource type?
20Fulfillment Relationship Query Types Identification of unfulfilled commitments or instigation eventsIdentification of fulfilled commitments or instigation eventsIdentification of commitment events that were not preceded by instigation events, or identification of economic events that were not preceded by commitment eventsCalculation of length of time between instigation and commitment events or between commitment and economic eventsIdentification of causes of commitments and/or of economic eventsIdentification of results of instigations and/or of commitment events
21Proposition Relationship Query Types What resources or resource types does the instigation event propose to increase or decrease?What quantity of a resource or resource type is the proposed increase or decrease for an instigation event?When did an instigation event propose to increase or decrease a specific resource or resource type?
22Reservation Relationship Query Types What resources or resource types is a commitment event agreeing to increase or decrease?What quantity of a resource or resource type is a commitment event agreeing to increase or decrease?What dollar value of a resource or resource type is a commitment event agreeing to increase or decrease?When did an event commit to increase or decrease a specific resource or resource type?Where did an event commit to increase or decrease a specific resource or resource type?
23Participation Relationship Query Types Which agent(s) participated in a specified event?How many events of a specified type has a specified agent participated?What is the total dollar value of events of a specified type in which a specified agent has participated for a specified time period?When did a specified event in which a specified agent participated occur?Where did a specified event in which a specified agent participated occur?
24Multiple-Relationship Revenue Cycle Queries Which sale orders have been partially filled?requires stockflow, reservation, and fulfillment-sale-order-sale relationshipsWhat is the total dollar value of accounts receivable for a specified customer at a point in time?requires duality, participation-customer-sale, and participation-customer-cash receipt relationshipsWhat inventory types have been presented to a specified customer in sales calls during a specified time period?requires proposition and participation-customer-sales-call relationships
25More Multiple-Relationship Revenue Cycle Queries Which salesperson presented a specified inventory type to a specified customer?requires proposition, participation-customer-sales call, and participation-salesperson-sales-call relationshipsWhat is the total dollar amount of sales of a specified inventory type that have been made to customers in a specified region?requires stockflow and participation-customer-sale relationshipsIn what region have sales calls involving a specified inventory type been the most successful?requires proposition, fulfillment-sales-call-sale-order, and reservation relationships
26SummaryWe discussed the sales/collection (revenue) process and how it fits in at the value system and value chain levelsWe discussed the extended REA pattern at the business process levelWe examined documents typically used to represent events and discussed related resources and agentsWe examined examples of relational database tables for the revenue cycle and discussed data input into those tablesWe systematically discussed types of queries for the sales/collection process to support decision-makers in various functional areasWe provided selected examples of queries of various types