Happy Thanksgiving to all US readers of our blog.
You read about revenue recognition, it is a tool used by some clients to plan an even spread of revenue reporting, very critical to the CFO organization.
Let us cover the three other ancillary processes.
- Inter unit transfers and allocations – This activity also can be a sub-set of the revenue recognition process. On the other hand it can be an independent activity as well. For large organizations, this activity is important to ensure that the sales revenue is properly allocated to either the selling unit or mapped to the cost of sales unit. This is a fairly transactional shared service activity, as the shared service center or the outsourcing unit will not be expected to take decisions on this. They will get instructions to pass relevant entries only, based on the CFO organization decision.
- Credit note generation – this sub-process can be triggered due to various reasons, like sales returns, transport damage, volume discounts, threshold discounts, promotional offers, gifts and incentives, like lucky draws etc. Here again, these would be more valid for B2B – retail products heavily, and others as well.
- Sales commission handling – This will be an internal or external process, depending on whether the sales unit personnel are in-house or commission agents and referrers. Mainly a shared service unit will be asked to prepare base documents aligned to claims by the sales personnel / commission agents, validate their claims based on pre-defined rules and the sales data (sometimes including collection data as well) reported. You can be asked then to upload the claims in the system. Approvals will normally be the client’s prerogative.
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