Chapter 2 - Layman’s Business - Revelation · Revelation Training Manual Chapter 2 Layman’s Business Revelation Accounting Software 15 1 Introduction to Layman’s Business In

Revelation Training Manual Chapter 2

Layman’s Business

Revelation Accounting Software

14

Chapter 2 - Layman’s Business

1. Introduction to Layman’s Business.................................................................................015

2. The Craft of Business.......................................................................................................015

2.1. Components of the Craft..........................................................................................017

2.1.1. Nominal (General Ledger).............................................................................017

2.1.1.1. Profit And Loss...................................................................................017

2.1.1.1.1. Gross Profit............................................................................018

2.1.1.1.2. Nett Profit..............................................................................018

2.1.1.2. Balance Sheet....................................................................................018

2.1.1.3. Trial Balance......................................................................................019

2.1.2. Debtors Ledger..............................................................................................020

2.1.3. Creditors Ledger............................................................................................020

2.1.4. Stock Ledger..................................................................................................021

2.1.4.1. Stock Calculations..............................................................................021

2.1.4.2. Single Warehouse..............................................................................022

2.1.4.3. Multi Warehouse...............................................................................022

3. Postings/Fuel Flow..........................................................................................................023

3.1. Purchasing Stock/Services from a Supplier/Creditor...............................................023

3.2. Selling Stock/Services to a Client/Debtor.................................................................023

3.3. Receiving Payment from a Client/Debtor into the Bank/Nominal...........................024

3.4. Paying a Supplier/Creditor from the Bank/Nominal ...............................................024

4. The Circle of Business (Engine)........................................................................................025

4.1. Sales Quotes.............................................................................................................025

4.2. Sales Orders.............................................................................................................026

4.3. Purchase Orders.......................................................................................................027

4.3.1. Pareto Analysis..............................................................................................027

4.4. Goods Receiving.......................................................................................................028

4.4.1. Import Split (Listed price/Landed Cost).........................................................028

4.5. Sales Invoice.............................................................................................................029

5. The Circle of Business in Revelation................................................................................030

6. Review.............................................................................................................................031


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1 Introduction to Layman’s Business

In the current world economy, more and more people are turning toward self-sustaining small business in order to secure a livelihood. This is due to the massive turmoil in the world economy and subsequent cutbacks major corporations have had to make in order to stay afloat. The other reason for the self-employment trend is due to the fact that up to 90% of all school leavers do not find meaningful employment within the first 5 years from completing their secondary and Tertiary educations. This in turn, has sparked many governments worldwide to recognise and invest in the development forums and loan structures in order to stimulate their failing economies through their perspective micro economies. The biggest challenge that such structures face is the fact that most

of the new ventures are started and driven by Layman that have only been skilled in a particular field, but usually lack the skill to run all aspects of the venture. In many cases, the focus of the individual that started the business is focused purely on their field of expertise. An IT Person, for instance, will over emphasise the importance of quality computers were a mechanic will most likely over invest in vehicles. The other aspects of the business usually suffer. It is equally true that individuals that started their careers in a large corporate were only exposed to certain aspects of Business. The result is that these individuals do not always realise how the different aspects of business influence each other. Due to this reason, a very high percentage of new businesses usually fail within the first thousand days. This is referred to as “the thousand day syndrome”. To try and eliminate this from happening, Revelation have developed a model that will help business starters, as well as their staff, gain vital insight into how business is supposed to be conducted in terms of accounting and GAAP principles.

2 The Craft of Business

Revelation compares business with an aircraft. The reason is quite simple. Just like flying, business is susceptible to outside influences that can hinder or help your business, just like a head or tail wind can help or hinder an aircraft.

And just like an Aircraft, your business has a very definite point of departure and destination. Your business destination can only be one of two possibilities. You may have started your business in order to build up equity in order to sell off the business or to leave a legacy to the next generation.

The most difficult part of any flight, is the take-off. During this time, the business will be going through some ebbs and flows until it becomes stable. One of the most common reasons for a new business not surviving the thousand day syndrome is misappropriation of the start-up capital. Some unscrupulous

suppliers will oversell the new business with the wrong stock while other new business owners will see the access to loan capital as a personal loan that can be spent as and when they want.


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When failing businesses are asked why the business did not survive, the most common answer from the business owner is, to blame their staff for not doing their jobs properly. As true as this may be, the owner of the business is almost always to blame. He is the Pilot of the business and thus the only person responsible for a crash, no matter what engine

failed him. And just like private aviation, private business does not have a parachute to save them when things go wrong. The Captain goes down with his ship.

It is important for the business owner to understand all aspects of his craft. The craft of business consists of four very important aspects. And just like in real aviation, the captain has to watch his instruments in order to make sure he stays on course. The most important instrument available to the owner of the business in order to keep it on track is the Trail Balance and Dashboard on the Supermenu.

It is the responsibility of the business owner to familiarize themselves with the content of the TB and Dashboard as it should indicate danger, way before disaster strikes. In the case of the TB, it is vital that safety mechanisms be built in. These are called Budgets (Expenses) and Forecasts (Sales). If any expense exceeds the particular Budget, it should be investigated. A good example of this is for instance rent. If your contract is for 12 months at R 15 000.00, your budget should be set up accordingly. If the actual rent posted does not equal the budget, a red flag should be waved. Your aircraft is going off course.


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2.1 Components of your Business (Your Craft)

Your business consists of the following 4 Components, Nominal or General Ledger, Debtors or Clients Ledger, Creditors or Suppliers Ledger and Stock or Services Ledger.

2.1.1 Nominal Ledger (General Ledger)

The Nominal Ledger forms the fuselage or “hull” of your business. It is that part of your business that houses and controls your Income, expenditure, assets and liabilities. The front of the Aircraft is where we “cut” through the Air. It is the business end of the craft and is known as the INCOME part of your business and is usually linked to the Debtors. The part were the pilot is housed, is the EXPENDITURE part of your business (the pilot gets a salary, for instance). This is usually linked to the Creditors portion of the business. The parts of your business were among others, the stock is kept, is the ASSETS portion of the business. And lastly, were the exhaust fumes escape from the craft (like loans that have to be paid back) is the LIABILITIES part of the craft.


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2.1.1.1 Profit and Loss

In Order for the Owner of the business to determine if the Business is making a profit, they simply have to deduct the income from the Expenditure. This is called a Profit and Loss Statement (Also Known as an Income Statement or a Trading Statement).

It is important to note that there are to different types of Profit in a business namely Gross Profit and Net Profit.

2.1.1.1.1 Gross Profit (Margin)

The best way to Understand Gross profit is to remember that it is that part of the Profit that will “Grouse Out” the owner because the business does not get to keep this Profit. In simple terms, Gross profit is all the company sales LESS whatever the products costs that were sold. (Overhead costs are NOT included yet). This is also called COST-OF-SALES. An example of Cost-of-Sales would be, were the company sells a bottle of Coke for R10.00. The company bought the Coke from the Suppliers at R 5.00. The R5.00

is the COST-OF-SALES. The Gross Profit is worked out in the following equation. Gross Profit = Sales – Cost-of-Sales. The percentage between sales and Cost-of-Sales is called MARGIN. In Layman’s terms, another word for Gross Profit is Margin. In our example the Margin or Gross Profit is 50%

Sales (1 x Coke) R10.00

Cost-of-Sales (What you paid the supplier) R 5.00

________

Gross Profit (Margin) R 5.00

To work out Margin or Gross Profit as a Percentage, use the following equation.

Sales less Cost-of-Sales divided by Sales times 100 (Sales – Cost-of-Sales / Sales * 100)

10 – 5 x 100 = 50% 10

2.1.1.1.2 Net Profit

Net Profit is that part of the Profit that the business can put away in the Company’s “Net”. This is the profit that is left over once the overheads like rent, salaries Tax and interest have been deducted from the Gross Profit. In simplistic terms, net profit is the money left over after paying all the expenses of an endeavour.

Gross Profit – Overheads & Running Cost = Net Profit


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2.1.1.2 Balance Sheet

The Balance Sheet is that part of Nominal ledger that determines what the business is worth. If you want to determine the net worth of the business (if the business is “Liquid”) the Assets must be higher that the Liabilities. If the Liabilities exceed the Assets, you are no longer “Liquid”. This means that if your Creditors can call up all the debt or money that your business owes them at once, you will not be able to meet the required payments. Your Creditors may opt to place you under Liquidation. This means that all your assets are “Liquidated” or turned into cash, in order to try and meet the outstanding debt. It is very important that the business owner makes sure that the status quo be maintained between Assets and Liabilities. Keeping your Balance Sheet up to date is very important in this regard.

The difference between the assets and the liabilities is known as equity or the net assets or the net worth or capital of the company and according to the accounting equation, net worth must equal assets minus liabilities.

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2.1.1.3 Trial Balance

The Trial Balance of a business can be considered as the Accounting Bible of the Business. The Trial Balance gives a total overview of the financial position of a business at any given time. The Trail Balance can give you Month-to-date and Year-to-Date information. The name comes from the purpose of a trial balance which is to prove that the value of all the debit value balances equal the total of all the credit value balances.

. The Trial balance really comes into its own when combined with properly kept account Budgets and Forecasting’s. The owner of the business really only need to look at the TB in order to determine if the business is still on track to its ultimate destination as it lists Profit and losses as well as the Balance Sheet information. A Good Trial Balance should at least have some of the following Header information.


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2.1.2 Debtors Ledger

The Debtors Ledger is that part of the Ledger that keeps a record of all the Sales Invoices and Credit Notes as well as the monies owed by clients and records all the payments received from the Clients in order to produce Statements for those clients. It is important to keep record of all the Debtors transactions as this will assist you in both collecting your money as well as to determine which of your clients are valuable clients to the business. To make sure that your business has a healthy cash flow, you will need to keep the ratio between the Debtors and the Creditors in check. In General, the ratio between the Debtors and Creditors Account should be more or less the same as the Gross Profit Margin of the company (Usually between 30 and 50 percept). We further recommend that you open a

Debtors Account for each Company or individual that purchases from you as this will supply your organisation with valuable database for future sales and marketing. You may open a “Cash Sales” account for the Clients to whom you would NOT like to extend Credit but still keep record of the account movements.

Tip: To remember what a Debtor is, the “D” in Debtor is closed. If you put money in there, “It will stay and not run away”. This is in other words, Money coming into the Business.

2.1.3 Creditors Ledger

The Creditors Ledger is that part of the Ledger that keeps a record of all the Purchases and Goods Returned to and from a Supplier as well as the monies owed by the company and records all the payments made to the suppliers in order to produce Remittance Advices for those suppliers. It is important to keep record of all the Creditors transactions as this will assist you in both paying your Suppliers timely and correctly as well as to determine which of your Suppliers are valuable to the business.

Tip: To remember what a Creditor is, the “C” in Creditor is Open. If you put money in there, “It will not stay but run away”. This is in other words, Money going out of the Business.


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2.1.4 Stock Ledger (Inventory)

The Stock Ledger keeps an accurate control of all your stock or inventory items in order for you to keep track of stock movement from suppliers and to Clients in order to achieve your margins and net profits. Stock is an asset to the business. When stock is bought, it should be recorded under the TB as an asset (Inventory). Once the stock is sold it should be moved out of the assets section of the TB to the expense portion via a sales Journal in order to form the one leg of your cost-of-sales entry. The actual sale forms the other leg of the entry. The difference between the Sales and Cost-of-Sales then becomes your Gross Profit. In order for you to reach the Gross Profit,

when stock is bought, you must add a MARKUP to the Cost price of the stock item, in order to achieve the desired margin. Markup simply means that you take the Cost price of an item and multiply that by a factor in order to increase the starting (cost) price in order to determine a selling price relative to the cost price. If for instance you would like to make a 50% margin, you will have to Markup your product by 100%. A good example is where a can of coke is bought (cost price) for R10.00. We would like to achieve a 50% margin (or Gross Profit). In order to do this you must add 100% of the cost price to the cost price. (You must in other words “Clone” the original Price). Thus R10.00 plus another R10.00 (100% Duplicated or Marked Up) gives a selling price of R 20.00. The question now is, how much Discount can be given in order to get back to cost price. The answer is 50%. R20.00 less half (50%) will give you cost price R10.00. Your Margin or Gross Profit is thus R10.00 (50%)

2.1.4.1 How to Calculate Margins

You will often have to calculate margins, either to work out a selling price from a cost price, or to work out what margin a certain selling price would result in.

2.1.4.1.1 Selling Price from Cost Price

The full formula for working out a selling price from a cost price and a certain margin is :

Selling = cost/((100-margin)/100)

Thankfully there is a quicker way to work it out. For a five present margin, divide the cost price by 0.95. For a ten present margin, divide the cost price by 0.9. For a fifteen present margin, divide the cost price by 0.85. For a twenty present margin, divide the cost price by 0.8. For a twenty-five present margin, divide the cost price by 0.75. For a thirty present margin, divide the cost price by 0.7. Hopefully you can see the pattern.

2.1.4.1.2 Margin from Cost and Selling Prices

Sometimes you will have a cost and selling price, and need to know what margin that results in. The formula is : margin = (1 - (cost/selling))x100

You can work it back from the examples given in Selling Price from Cost Price.

If cost/selling is 0.95, the margin is five present. If cost/selling is 0.9, the margin is ten present. If cost/selling is 0.85, the margin is fifteen present. etc...


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2.1.4.1.3 Discounts from List Price

Many suppliers prefer to quote list prices less a discount. In these circumstances it is useful to be able to quote customers a discount off list. They love the idea that they are getting a discount.

To work out the nett. cost price (what we pay) from a list less discount, use the following formula :

cost = list * ((100 - discount)/100)

Working out what discount to quote customers, whilst still maintaining an acceptable margin, can be fiddly.

You can work it out as follows. Final discount is the discount to offer the customer, supplier discount is the percentage off list price you have been offered, list is the list price and margin is the margin you want to make as a percentage.

cost = list * ((100 - supplier discount)/100)

selling = cost/((100-margin)/100)

final discount = (1 - cost/selling) * 100

It can actually be easier to guess a few times though. Work out the cost price. Then work out the

selling price if you offer (for example) forty present off list - and see what margin that leaves you

with. If it is too little, try reducing the discount you offer - or vice versa.

Stock may be held in a single warehouse or in multiple warehouses.

2.1.4.2 Single Warehouse

Stock held in a Single warehouse means that a single stock control account is kept in the TB. Bin locations may be created for each of the stock items. In the event of a Single warehouse, live stocktakes may be held. This means that the business does not have to close while stocktake takes place.

2.1.4.3 Multi Warehouse

Warehouses may be used to either keep stock in different warehouse on the same property (Bulk store, Bond Store) or you may setup multiple locations throughout the country by using a Centralised server and then making use of terminal Services in order to allow each site access to their own stockholding. You may setup multiple Stock Control accounts on the TB as well as setup a bin location for each Warehouse per stock item.

Tip: In Revelation, depending on your package, you may setup between 9 (Enterprise) and 29 (Empire) Warehouses.


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3 The flow of Stock and the flow of Cash (Fuel)

In business we need to keep record of our transactions. Firstly, because we have a legal obligation. Secondly, to determine our profitability. We are therefore Record-keepers of the movement of stock and the movement of money. We keep record of the movement of Stock by posting a Goods Receive Note (purchasing stock) and an Invoice (selling stock). We keep record of the movement of money by posting our Cashbook. Stock and money move from one place to another and this movement is called a Journal. A Journal consists of a left hand entry (debit) and an equal right hand entry (credit). While you are booking your stock in and out by posting a Goods Receive Note and an Invoice and posting your Cashbook: Revelation is writing the different journals to the respective Ledgers in the background and in the process it populates your Management Reports. This is the vital part for you as business owner as you want to be able to rely on your Management Reports (Trial Balance and profit & Loss Statement). Your Management Reports will only be accurate if you do these three things in your business: Booking stock in through a Goods Receive Note, booking stock out through an Invoice and posting your Cashbook. If you want to rely on your Balance Sheet to be accurate you need to add your Assets and Liabilities onto Revelation as well.

3.1 Purchasing Stock from a Creditor

Stock is purchased from the Supplier (Creditor). We now owe the Creditor money for the stock. Creditor has reduced (-) or (Credit). The stock has increased (+) or (Debit) in our assets.

3.2 Selling Stock to a Debtor

Stock is now sold (Reduced, - or Credit) and the Debtor now owes us more (Increase, + or Debit).


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3.3 Receiving Payment from a Debtor into the Bank

The Debtor now pays us (Decrease, - or Credit) what they owe us, into the Nominal Bank Account which in turn will increase (+ or Debit).

3.4 Paying a Creditor from the Bank

We now pay from our Nominal Bank Account (Decrease, - or Credit) into the Creditors Account (Increase, + or Debit), the money we owe them.

Summary of the Flow of Stock/Services & Cash (fuel)

+ = Debit (More, Increase) - = Credit (Less, Decrease)


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4 The Circle of Business (Engine)

An Aircraft can only move forward with engines or some form of propulsion. At Revelation the engine of business is referred to as the CIRCLE OF BUSINESS. The Circle of Business has five very distinct Points. Most businesses to not use all five as it is not always practical, but in an ideal world, this process should always be followed. Any transaction should start off with your client requesting a verbal or written notification of the price or fee for a possible transaction. This is

referred to as a SALES QUOTE. Once the Quote is accepted, the client should issue a SALES ORDER. You in turn may or may not, depending on stock holdings, issue a PURCHASE ORDER. Once the Goods are received from your Supplier, a GOODS RECEIVED NOTE/VOUCHER is processed. All that remains now is that the goods or services should be INVOICED to the client..

The Circle keeps on repeating itself until the day that you have arrived at your destination port. The correct use of the Circle of business has been the difference in many of the large corporations that started in a Garage at home. The Circle is so logical that may of the successful companies did not even realise that they were implementing it. As a Starting or existing business looking to grow, the full application of the Circle can only have one outcome – SUCCESS!!!

4.1 Sales Quote

When training Revelation, I always ask my students, what the definition of a Sales Quote is. I start of by misleading them with small items that is being bought and sold, like purchasing a coke from the corner café. I am yet to get one correct answer on this seemingly straightforward question. Most people would answer that a sales quote is a price you are giving your client for an item, in other words the price they will be paying for the products that you offer for sale. Although this is not wrong, a Sales Quote is much more significant than that. I would like to go so far as to say that a Sales Quote is the single most important aspect of any business transaction. I am always amazed at the change of

attitude and answers on my question when I change the object being quoted on. My very first job as a newly married struggling student was at the local agents for P&H Mobile Cranes.

Whenever a quote was issued to a potential new crane delivery, there was a massive hype and anticipation in the company. Frantic calls backward and forward between the factory and then to the client. Detail, discussion, more detail, and then, it was time to celebrate. That Friday no one goes home early, the client has accepted the Quote.

Even then, we were talking about millions. The word “Sales Quote” now takes on a whole new meaning. Everyone understood that the delivery date had to be just right. The exchange rate was monitored and discussed at every coffee break. Finally, the night before the expected delivery, no one shut any eye. Is it going to arrive, are we going to be paying penalties. Did they send the correct model this time?


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With this in mind, what is a Sales Quote really? According to South African Private Law, a Quote is:

“A formal (Printed and captured) statement of promise (submitted usually in response to a request for quotation) by potential supplier (You or your company) to supply the goods (Stock Item) or services (Service Item) required by a buyer (Customer or Debtor), at specified prices, and within a specified period. It may also contain terms of sale and payment, and warranties. Acceptance of the quotation (Sales Order) by the buyer constitutes an agreement binding on both parties.”

In Layman’s terms,

“A Sales Quote is a one-sided legally binding intent by the potential supplier to supply goods or servers to a potential client at stipulated terms and conditions. Depending on the terms, the supplier is bound by this intent until the clauses of the contract are exhausted or come into play.”

If, for instance, you quoted the potential client on 10 bottles of coke at R15.00 and you stipulate that you will hold your prices steady for the next seven days, the potential client may accept your quote right up until the last second on the last day. You may not refuse to supply him during any time of the quote being active, even if you ran out of coke and your new batch came in at a higher price (unless you had a clause built in to that effect). Now in the case of expensive equipment like in our Mobile Crane example, getting the quote wrong could have significant ramifications. I remember my first Bosses last day on the job. When he ordered a back axle for a Series B crane, when in fact the client owned a Series A Crane. He did not even try to collect his last pay check, he just knew....

The other very important aspect of logging Sales Quote is the fact that Sales Teams will have a list to follow up on, even if the quotes have expired.

4.2 Sales Order

If a Sales quote is a one sided entry into a legally binding contract, what is a Sales Order then. A Sales Order is where the second party enters into the contract. On signing the quote or issuing some form of written or verbal intent (Purchase Order to us), a meeting of the minds takes place. This then constitutes the fruition of the contract. Both parties are now bound by the terms and conditions of the contract. For the first time in the process you, the supplier have rights based on the terms of the contract. If, for instance, the client (no longer potential Client) refused to collect the goods that were ordered, you will have a legal standing in a court of law. Again, the significance is only clear when large amounts are at stake, but the principle remains

the same. A Sales Order is an internal Document. It is important to note that the Client will issue a Purchase order from them to us. We in turn will create a Sales Order on our System.

It is always good practise to issue the Sales Order and send it to the Client as a confirmation of their Purchase Order.

The biggest difference between a Sales Quote and a Sales Order is the fact that Sales Orders should place your stock in reserve. In Revelation, the required stock on the Sales Order is flagged as being “Un-Available”, and may not be sold to other clients.


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It is also very simple to convert a Sales Quote into a Sales Order. Hence the remark that the Sales Quote is one of the most important steps on any transaction in the Circle. Using a powerful tool like Revelation, once a Sales Quote is on the System, it may be converted into any of the other aspects of the Circle of Business.

Due to the potential legal ramifications of the Sales Order, it is very important to monitor the details of the Order. To this end, it is recommended that shipping and delivery schedules be kept. In Revelation, you may print Outstanding Orders for a date range.

You must also make sure that you, in turn, place your purchase orders with your suppliers with the terms of the Sales Order in mind. If your Supplier has a lead time of seven days, you must not quote your clients a lesser lead time. Make sure that you have proper and up to date stock information at all times.

4.3 Purchase Order

A Purchase Order is the Contractual confirmation from us to our Suppliers where we enter into a legally binding Contract with them for goods or Services required based on a Quote presented to us. As with Sales Orders, the terms and Conditions of the Quote and subsequent acceptance via the Purchase Order, will govern the Contract until it has come to fruition.

As with Sales Quote and Sales Orders, it is possible to print reports in order to keep abreast with delivery and other contractual details.

It is noteworthy that in today’s modern times, goods delivery lead times have improved significantly. A lot of businesses are struggling to

come to terms with this concept. Usually this is a result of tradition inherited from the founding members being old school. Up to recently, business equity was determined by, among other things, its stock holding. Investing in stock rather that banking cash, has been the saving grace of many past endeavour. However, times have changed. With the onset of e-commerce as well as the rapidly changing market supply and demand for the latest and greatest product, many businesses have been caught sleeping. Stock that was an asset last month has overnight been turned into a liability. A good example if this would be the cell phone industry. Beware the store that still stocked the iPhone 3 the morning when iPhone 4 was launched.

More and more focus is being put on company’s cash flow. Although the concept is not new, the industry as a whole is placing a very high value on the structuring of Pareto Analysis within a company, especially when it comes to Stock and Debtors. When ordering stock from your suppliers, it is important to keep this principle in mind. It will have a great benefit on your cash flow. In Revelation, it is very easy to convert a Sales Quote and a Sales Order into a Purchase order or even Multiple Purchase orders. This assists business in keeping cash flow healthy.

4.3.1 Pareto Analysis (80/20 Principle)

The Pareto principle, also known as the 80-20 rule, was suggested and developed by Business-management consultant Joseph M. Juran. He named after Italian economist Vilfredo Pareto, who observed in 1906 that 80% of the land in Italy was owned by 20% of the population; he developed the principle by observing that 20% of the pea pods in his garden contained 80% of the peas.

Vilfredo Pareto Joseph M. Juran


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Applied in Business, Pareto analysis states that 80% of your business is generally generated by 20% of your clients. It further states, and this is our point of interest, that 80% of all a business sales are derived from 20% of your product. In Revelation these stock items are referred to as Pareto A Product. They should always be in stock. A good example of this would be your Asthma medication that you cannot live without, especially if you are suffering Asthma attaches. If your local pharmacy does not stock them, you are out of there so fast; it would make their heads spin.

Items that assist the “Pareto A” Product, but are not that vital, would be known as Pareto B Product. A good example again from the pharmacy would be the Vitamin Booster for your lungs. If the pharmacist can offer a good alternative, you will not be too unhappy. Promising an afternoon delivery of your first choice will really put your mind at ease.

Pareto C Product are product that are nice to have, but will not stop business. The health foods in the last aisle would probably fall into this category. It is stock that you would expect to see in a pharmacy, but if you have run out, no one will persecute you. Just make sure they get stocked up within the next few days or even weeks.

Pareto D Product would be the new cholesterol home test kit that you have some brochures on. If you could order that for Uncle Dan and let him know when it is in stock, he will be so grateful, “thank you young man, you know, I have been shopping here when your grandfather was still alive...” It is not going to put you out of business when you cannot deliver.

In order to make the Pareto Principle work for your business, make sure that your minimum and maximum levels are up to date and well maintained. (Take seasonal changes and market trends into consideration).

4.4 Goods Receiving

Goods receiving is the process where stock is delivered from the supplier to your goods receiving store. In business, when working with stock, there is a right and a wrong way to receive stock. Most business prefers the wrong way of Goods Receiving. It goes something like this. The verbal order gets placed with some person that answers the phone. Whenever the stock arrives, it promptly gets offloaded by whoever is available and then the driver sticks a piece of paper in your face for you to sign. The paperwork gets dumped in the in-tray for due processing. Within the next week or two, the stock will find its way to the store room and eventually the Shelf. As ridicules as this sounds, more than

50% off all business operate in this way. Stock losses are huge and in most cases detrimental to the bottom line of the company. It is only when stock shortages are noticed, that the system springs into action. The proper way to receive stock is to use a system and place an official printed order. The prices as well as quantity should be recorded.

The Supplier should commit to a definite delivery date. It is recommended that the goods receiving area has a computers that is linked to the Revelation system. Once the Delivery arrives, the Purchase order should be called up. The delivery should now be checked against the original order. At least two people from your company should be present to assist in counting the stock that is being delivered.


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It is further recommended that the goods are read into the computer via a Goods DELIVERY Note (Enterprise & Empire) and not GRNed straight away. This process will update the stock fields in Revelation but not update the Creditor. This gives the back office capture clerk the opportunity to double check the delivery. Once the goods have been counted and read into the System, labels should be printed and the stock should be packed away or placed on the Shelves (via a packing slip with bin locations on). The back office will now update the Creditor and log a payment date for the stock. Backorder lists that can now be fulfilled and delivered can also be printed by the back office. If you have a MARKUP on stock codes, as part of the GRN Process, you should update the selling prices. IF not, this process should be allocated to a dedicated costing agent within the company.

4.4.1 Import Split

Import Split is the process were additional costs that was incurred in obtaining the stock gets added to the cost price. We generally refer to actual costs and landed cost. The actual cost is the cost that the product costs you directly from your supplier. The landed cost is the actual cost as well as the additional costs, like transport, duties and clearing fees. In Revelation these costs can be added to the Cost price of the stock by the import split mechanism. Revelation can have up to 3 additional costs added to the main cost price via a single GRN. This will create up to 4 creditors from one GRN.

.

4.5 Sales Invoice

The sales invoice is the last part in the circle of business. The sales invoice is the process were the goods or services are booked out to the Client account. In this process, it is highly recommended that you convert either the clients Sales Order or Sales Quote to an Invoice. This is done in order to reduce the Sales Order outstanding Balances and mark them as completed. The client should now sign the invoice as proof that they are in agreement to the supply, and that it could service as a Proof-of-Delivery if ever a dispute arises.

All that remain now is for the Client/Debtor to pay you. You pay your Creditors and Nominal commitments and then you Balance your bank. This process goes around and around until you finally reach your destination. This rings true for any business, no matter if you are a Doctor, merchant or street vendor.

In Conclusion

As a result in utilising the Circle of business correctly, the user will be in a very powerful position to make business decisions very accurately, as well as pinpoint trouble areas more effectively. Ignoring the Circle and its principles, however, has seen many a business fail.

The pilot does not have all the instruments that they will require, especially when facing conditions were you can no longer “fly by the seat of your pants”. This is often observed were a small concern starts to grow. If the pilot does not prepare the craft before it takes off, it will not easily weather the storms surrounding growth and business in general.

It is also VERY important to employ the correct staff for the required positions. You must make sure that your staff has the correct training and guidelines for the positions they hold. This is the responsibility of the “Captain”, NO ONE ELSE!!!


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3)

Purchase

Order

4) GRN

/GRV

5) Sales

Invoice

1) Sales

Quote

2) Sales

Order

5 The Circle of Business in Revelation

The Circle of Business in Revelation is called “DAILY OPTIONS” We have decided to place the most used option first and then work our way down. It is VERY IMPORTANT to note that Revelation caters for Multiple Sub-Modules to be run simultaneously. The user with this option enabled, will be able to produce multiple Sales Quote, Sales Orders, Purchase Order etc., all at the same time.

The payment from your Clients and to your Creditors takes place in option 6 – [Postings to

Accounts]. Circle of Business / Daily Options 1 – Sales Quote 2 – Sales Order 3 – Purchase Order 4 – Goods Receive Note / Voucher 5 – Sales Invoice 6 – Postings from Clients and to ......Suppliers


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6 Review


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Notes

Documents

Chapter 2 - Layman’s Business - Revelation · Revelation Training Manual Chapter 2 Layman’s Business Revelation Accounting Software 15 1 Introduction to Layman’s Business In