ISYS6300 - Business Process

Fundamental
Week 5 – The Revenue Cycle
 Chapter 9:
The Revenue Cycle

Prepared by
Kent Wilson
University of South Australia
Revenue Cycle Overview and Key
Objectives

 The revenue cycle consists of all events that are

involved in the exchange of goods and services with
customers, including the collection of payment for
those goods and services

 Excellent customer service must be provided at all

times
 Source Documents
1. Customer order

2. Order acknowledgement

3. Credit application

4. Sales order

5. Goods packing slip

 Source Documents (Cont)
6. Bill of lading

7. Shipping notice

8. Sales invoice

9. Remittance advice

10. Customer service log

Strategic Implications of the
Revenue Cycle

 The level of sales drives all other activity levels

within the organisation

 In order to survive and prosper an organisation

must not only remain profitable, it also must
be able to achieve positive cash flows

 A well controlled revenue cycle can provide a

competitive advantage by providing superior
customer service
Technologies Underpinning the
Revenue Cycle

 ERP (Enterprise Resource Planning)

o Improves the integration of enterprise - wide data

 EDI (Electronic Data Interchange)

o Enables the exchange of data between two separate
computer systems
Technologies Underpinning the
Revenue Cycle (Cont)

 XML (eXtensible Markup Language)

o Used for online sales sites to provide efficient data
exchange

 CRM (Customer Relationship Management)

o Improves understanding of customers and their
interaction with the organisation
 Data & the Revenue Cycle

 Revenue cycle activities require access to:

o Customer data
o Inventory data
o Accounts receivable data
Revenue Cycle Business Decisions

Strategic Level: Operational Level:

o Price setting
o Sales return & warranty
o Provision of credit
o Cash collection
o Responding to customer inquiries
o Credit extension
o Inventory availability
o Delivery method
o Cash receipt allocations
Revenue Cycle Documentation
Revenue Cycle Context
Revenue Cycle Logical Data Flows
 Revenue Process Activities

1.
• Process Customer Order

2.
• Ship Goods

3.
• Bill the Customer

4.
• Receive & Record Payment
 Process the Sales Order

 Key activities:
o Check inventory levels
o Credit check
o Create sales order
 Backorder for goods not available

 Table 9.3, p416 summarises these activities

Pick, Pack and Ship the Goods

 Key activities:
o Pick the goods
o Prepare for shipping
o Deliver the goods

 Table 9.4, p421 summarises these activities

 Bill the Customer

 Key activities:
o Check sales completion
o Create invoice

 Table 9.5, p426 summarises these activities

Receive and Record Payment

 Key activities:
o Receive payment
o Record payment

 Table 9.6, p428 summarises these activities

Measuring Revenue Cycle
Performance
 Overview of Chapter 9

 The objectives and strategic implications of

the revenue cycle were established

 Technologies that underpin the revenue

cycle activities were identified

 Both strategic and operational business

decisions were outlined
 Overview of Chapter 9 (Cont)

 The primary activities in the revenue cycle

were identified and discussed

 Risks and ways of mitigating these risks were

considered

 The importance of establishing KPIs was

emphasised
 Key Terms

o Back order o Exception report

o CRM o XML
o EDI o Post - billing system
o ERP o Pre - billing system
Thank You