There are four basic steps in the cash receipts process:
The following steps are focused on cash received for the sale of goods or services – the most common method of receiving cash
1.Take the customer order
2.Deliver the good or service
3.Bill the customer
4.Collect cash
Every company is different, but there are 4 basic steps in the process
Take out your hand out and use it to follow along for the next few slides, as we go through the process in detail.
Step 1: Take the customer order
The sales department is generally responsible for taking customer orders, answering customer questions, and ensuring inventory is available
In certain circumstances, the sales department will obtain a formal sales order or sales contract
Qs: In which circumstances would you need a sales order or sales contract?
The sales order contains:
Description of items or services ordered
Quantity
Price
Applicable taxes
Delivery (timing and method)
Payment methods
Payment terms
Any other terms or conditions
Qs: Has anyone been involved in drafting sales contracts before? Do you know what you would include on them?
Discuss an example of a sales contract and the different items you can find on it
sales order
Go through each section, briefly showing:
Qs: What is missing from this order?
Delivery (timing and method)
Payment methods
Payment terms
Step 2: Deliver the goods or services
Following the customer order, the company must deliver the goods or services to the customer
If the goods need to be shipped, the warehouse department packs and ships the order and prepares a packing slip
A copy of the packing slip is sent to the accounting department to trigger an invoice
Delivery of the goods can also simply be an exchange at a company’s storefront (i.e. for retail companies)
packing slip
Step 3: Bill the customer
Once the goods or services are delivered, the customer is billed
The accounting department prepares and delivers a sales invoice to the customer
The sales invoice should correspond to the sales order and packing slip, if applicable
In smaller companies and storefronts, the customer is billed when the goods are exchanged
You may be responsible for drafting sales invoices. Since these are sent to customers, you need to be 100% sure they are accurate.
ASK: Why is it so important the invoices are accurate?
-Sent directly to customers, requesting they pay you
-If customers are overcharged, they are not typically happy
-Important role in customer satisfaction and retention
Sales Invoice:
A document that is delivered to a customer as a request for payment. It generally contains the following information:
Unique number
A description of the goods or services delivered
Total amount due
Payment method (cheque, bank transfer)
Payment due date
Company TIN for VAT purposes
Qs: Who has experience drafting invoices? How did you do them? Word, excel, software? What did you include?
sales invoice
Qs: Can a volunteer walk us through what is on this invoice?
Qs: Anything missing?
-In Rwanda, must include your TIN number and your customers’ TIN if they have one
Step 4: Collect cash
The accounting department handles cash collection and deposits to the bank
Controls are very important at this stage of the process to ensure that cash is protected
Once payment has been received, a sales receipt is provided to the customer as proof of payment
You may be responsible for drafting sales receipts. Since these are sent to customers and used for tax declarations, you need to be 100% sure they are accurate.
The final step in the cash receipts process is actually getting your cash
Qs: Why is it so important the receipts are accurate?
-Sent directly to customers, after payment received
-These are used for tax declarations and therefore need to be 100% accurate so your declaration and your customer’s declarations are correct
Sales Receipt:
A document that is delivered to a customer following payment to provide evidence that payment was made. It generally contains the following information:
The amount that paid
Total tax paid
Your Company’s TIN
Your Customer’s TIN (if they have one)
sales receipt
Qs: Has anyone seen one of these before? I’m sure we all have.
Qs: Someone walk us through what is contained on here.