Sales Process

The Sales process navigates from selling the goods (and services) to delivering those goods to invoicing the customer for their purchases, to the last step in accounting of receiving the incoming payments. The Standard Documents that are involved with the Sales Process are: -                                                    SALES ORDER    à  DELIVERY    à  A/R INVOICE    à  INCOMING PAYMENTS.

 

Now lets us individually understand the workings of each document.

·       Sales Order: - The sales order is a commitment from a customer or lead to buy a product or service. The document serves as a foundation for planning production or purchase orders. Sales Order creates no Inventory or Financial posting in the system.

·       Delivery: - The Delivery is a legally binding document indicating that the shipment of goods or the delivery of services has occurred. When you create a delivery, the corresponding goods issue is also posted. The goods leave the warehouse and the relevant inventory changes are posted.   

·       A/R Invoice: - The invoice is a legally binding document. When an invoice is received, the posting is made to the related customer accounts in the accounting system. The A/R Invoice creates a financial posting which debits your customer and credits your sales revenue account, provided you’ve linked your delivery document to your A/R Invoice.

·       Incoming Payments: - Use this window to create a record each time your company receives a payment from a customer, vendor, or account. You can create an incoming payment to clear the debt of an open A/R invoice or an opening balance. You can also create an incoming payment for a down payment received before the goods or services were provided. An incoming payment document can be created for the following payment means: Cash, Check, Credit Card and Bank Transfer.

 

Other than the standard sales process, (mentioned above) there is another process called ‘Streamlined’ sales process. For our streamlined process, we will use just one document, the A/R Invoice, instead of going through the entire sales process. The A/R Invoice is the only mandatory document in the sales process. When an inventory item is sold on an A/R invoice that has no preceding documents, two additional postings are made: by a delivery document in a perpetual inventory system: a debit to the cost of goods sold account and a credit to the stock account. The streamlined sales process is predominantly used when your customer has an urgency in procuring the items or services that you sell and there is not enough time to go through the conventional sales process.

Blanket Agreement

Blanket agreements are long-term arrangements between a purchasing organization and a vendor, or a sales organization and a customer, for the supply of items or provision of services over a period based on predefined terms and conditions. Blanket agreements can be used as a basis for expected revenue forecasts and capacity planning. If a valid blanket agreement exists with a customer or vendor, SAP Business One automatically links sales and purchasing documents to the blanket agreement. This way, the prices agreed upon with the business partners can be copied directly into the sales and purchasing documents.

 

 

In SAP Business One, you can have two types of blanket agreements:

·       General blanket agreements: Are used to track fulfilment of terms to obtain a special bonus at year end, for example, for selling or purchasing a certain quantity of an item or for achieving a defined turnover.

·       Specific blanket agreements: Are used to track fulfilment of terms to obtain a special discount for the individual sales or purchasing transaction. They are also used to determine a delivery schedule, for example, by defining at which intervals which quantity of goods should be delivered.

 

Blanket Agreements can be set up in different ways, an example for general blanket agreements is to buy or sell a defined quantity of goods and receive a value credit memo. In this scenario you create a blanket agreement for the business partner, specifying the number of items you plan to buy or sell. On the other hand, an apt example for specific blanket agreements is to generate a specific turnover with the business partner and buy or sell goods at a defined price. This blanket agreement calls for the goods to be provided at a certain date or time, at an agreed upon quantity.

CRM

There is an entire module dedicated for CRM (Customer Relationship Management) in SAP Business One. As the name suggests, the entire module is dedicated to help the organization with its customer acquisition and customer retention. Let us dive deeper in this subject matter.

 

·       Customer Acquisition: - The forms that help with customer acquisition are campaigns and opportunity.

o   The Sales Opportunities window lets you track and analyse pending opportunities according to the progress of activities such as meetings, negotiations, and other proceedings in the sales pipeline. Using the various tabs of the Sales Opportunity window you can process a sales opportunity from creation and field configuration, through updating and reporting, to closure.

o   SAP Business One lets you create, maintain, and analyse your marketing event information using the campaign management feature. Managing a promotional campaign typically involves the steps outlined below:

§  Creating and Maintaining a Target Group

§  Creating a Campaign Using the Campaign Generation Wizard

§  Managing the Campaign Data

§  Viewing and Maintaining the Data

§  Generating Sales Opportunities from a Campaign

§  Filtering Campaign Response E-Mails

§  Viewing the Campaign List Report

 

·       Customer Retention: - The filed involved with customer retention are Activity and Sales Quotation.

o    Use this window to add or update one-time, or recurring activities that you have pertaining to your business partners, such as meetings, phones calls, notes and tasks, as well as to your private activities. All activities are displayed in the calendar.

o   You create the sales quotation document as an offer or proposal that you send either to a customer, or to a lead. It can be first link in the sales process chain.

Financial Reports

Every module, excluding the administration module, has in-built reporting functionality in SAP Business One. In this blog we are going to look at the different types of standard reports that come under finance module.

 

·       Accounting Reports: The major purpose of accounting type reports is to display reports that provide an overview of the objects and data in your accounts & Tax reports that you must submit to the tax authorities. Example: (G/L Accounts & Business Partners Report, Tax Report…)

·       Financial Reports: Financial reports is required to present the organization’s financial position. The reports that help in achieving this are: Balance Sheet, Trial Balance, Profit & Loss Statement, Cash Flow, Statement of Cash Flows.

·       Comparison Reports: These reports let you review the results of business activities of two posting periods or compare two companies. The financial reports that can be compared are: Balance Sheet, Trial Balance and Profit & Loss Statement.

·       Budget Reports: If your company manages budgets, you can create a budget report to review business activities from a budget perspective. Example: (Under Budget, the first report available is Budget Report, this report analyses the business activities that took place during a defined period, with reference to a selected budget scenario.)

 

SAP Business one has a comprehensive set of reports for an SME to function smoothly. In the case where your organization requires additional reports that are not available as standard, you can make use of a reporting tool called Crystal Reports to create personalized reports to cater your organization’s needs. More on Crystal Reports in the upcoming blogs

Cost Accounting

In addition to their regular bookkeeping, many businesses perform expense and revenue analyses that measure the profitability of each of their business activities or departments. The cost accounting function in SAP Business One enables you to define sets of cost-centers and distribution rules. Generating respective reports provides important cost-related information. SAP Business One provides two cost accounting methods: distribution rules and projects. In this blog we will be discussing about cost-centers, distribution rules & dimensions.

 

1.      Cost-Center: A cost-center is a company unit or division that performs a specific business function, such as manufacturing specific products or providing a specific service. The cost-center you define here represents the respective division or department and is used to consolidate the expenses and revenues resulting from the ongoing activity of the specific organizational unit.

2.      Distribution Rules: A distribution rule is a cost accounting method used to allocate direct and indirect expenses and revenues to one or more cost centers. It contains information regarding the portion or the fixed amounts of the expenses or revenues to be allocated to each cost center. Example: (Say you want to distribute your indirect expense incurred by rent; you can specify the portion of the total rented space that a specific cost center uses. If the sales department uses 700 SqFt and HR department uses 200 SqFt, you can distribute the expenses incurred by rent and professional cleaning services proportionately between the two departments using distribution rules.)

3.      Dimensions: Multi-Dimensions are used in an organization when you require multiple views of an expense and revenue analysis. Example: (The CEO of your company discussing the products OEC Computers sell, the CEO tells you that they want to analyse revenues and expenses by the two lines of business they run:  hardware and applications. At the same time, the accountant claims that a better analytic view will be according to departments. That is sales, support, and development. Both views can be incorporated using two different dimensions, Departments and Line of Business. Multi-Dimensions enable up to five different views to be generated on the same data.)

Fixed Assets

Fixed asset management is an important part of every organization. SAP Business One enables you to create, manage and retire fixed assets that belong to your organization. Let us dive deeper concepts into the concepts and SAP Business One forms that help us in managing Fixed Assets.

 

1.      Asset Master Data: SAP Business One lets you manage all fixed assets in the asset master data. You can create, update, and delete a fixed asset using the asset master data. After an asset is capitalized, you can view and maintain the asset depreciation details in the asset master data.

2.      Capitalization:  Capitalization is the process of recording an acquisition and production cost as a fixed asset (written off as depreciation over several accounting periods) instead of an expense (charged against earnings in one accounting period).

3.      Retirement:  In accounting, retiring a fixed asset means removing it from a corporate balance sheet and operating activities. Use this window to create retirement for assets. You can retire an asset in the following ways: Retirement through Sale, Retirement through Scrapping & Complete or Partial Retirement.

4.      Transfer: In SAP Business One, you can transfer a fixed asset to a different asset class or a different asset master data record. This may be necessary if you want to do any of the following: Assign a different set of G/L accounts to an asset, Create different asset master records for the same asset, Change the asset class of an asset for which bookings have already been carried out & Change the asset class when an asset construction has been completed.

5.      Depreciation: Each single asset transaction leads to a change in planned depreciation, but not to a posting to the relevant general ledger accounts. Only when you execute a depreciation run does the system carry out all depreciations planned up to the specified date. Use this window to enter the desired data for a depreciation run and view previous depreciation runs.

Journal Entry

Journal entries are financial postings that are either created automatically by the system when you record a transaction, or it can be manually created by a user. Journal entries are the reason why, the amount which you have traded or purchased are posted to its subsequent G/L Account. In this blog we are going to focus mainly on manual postings. For a better understanding let us look at all the forms the help you to post a manual journal entry.

 

Journal Entry, Journal Vouchers, Recurring Postings are the three forms that enable the user to post a manual journal entry.

1.      Journal Entry window’s function is to create entries for accounts and business partners. This window can also be used to display previous journal entries that were either manually or automatically posted.

2.      A journal voucher is a draft stage document that creates no values in the general ledger. At this stage, the journal voucher can be checked and completed, and then recorded. The input template is identical to that of the Journal Entry window.

3.      Recurring Postings window assists the user to record set of journal entries that recur monthly or weekly. (Example: recurring journal entries can be payroll orders or standing instructions that are paid to the bank every month.)

 

We’ve understood what Journal entries are and what are the windows in SAP Business One that help you to post a manual journal entry. Now let us look at some scenarios where manual journal entries necessary. Imagine your company trades wooden doors and that you have traded 10 pieces of wooden doors to your customer for $1000, later you find out that there was an internal costing error and that the actual cost of 10 doors were $1100. In this case, as a correction entry, you add a manual journal entry debiting the customer to cover you actual selling price of those 10 wooden doors.