Monthly Sales Report - needs to be based on Date Paid

[softpac]

We have entered our first financial reporting period. Using AC7 RC1, I've printed the Monthly Sales Report for the last 3 months. Reconciling that with my bank statement and there is a discrepency. After some investigations, it looks like the sales report is based on order date rather than date paid. These two dates in real life are not always the same. Eg fax/mail orders, credit card orders where the user entered an incorrect credit card etc.

To me, it's not a sale until I have been paid. Otherwise it's simply an order. I had some fax/mail orders that occured in the last week of a month, but the money was not deposited until the following week, which was the next month. The Monthly Sales Report shows the sale occuring on the order date. However, I feel it should show the sale when it was actually paid.

If there is a general consensus in agreeing with me, I'll submit a request to AC for a feature request change.

Do others agree?

[jmestep]

I can see your side of it, but I don't know that it should be a feature. Some of us don't even touch the order on Able after it is placed, so if a feature like that is added, I think it should be a toggle- whether to take the date of the order or the data paid.

[softpac]

Another alternative, is to have 2 reports. One called Monthly Sales Report, which uses the date paid field. And another new report called Monthly Orders Report (?) which uses the order date field.

[AbleMods]

The difference lies in whether you're running accrual based or cash based accounting. In accrual-based accounting, a sale is a sale regardless of payment status. An unpaid sale is accounts receivable, a paid sale is cash receipts. Cash-basis means nothing counts until the money is in the bank.

The bigger question is the difference between Total Revenue and Total Sales. Revenue is monies you have received subject to change as payments are refunded. Sales is the total purchasing commitment from the customer base subject to change as orders are cancelled and prior to payment being received. Even if you haven't been paid, you still sold something.

The same could be said for the use of the word "customer". Are they a customer when they order something or are they a customer when they have paid for what they ordered?

A true revenue-only history report would require a system that does not allow any order to be placed without payment being made. Unfortunately AC7 allows unpaid orders to be added to the system, thus some of the reports appear inaccurate. That would be operating under a cash-basis accounting model.

I'm like you, I want to see true revenue and not even accept unpaid orders into my system. The last thing I want to see is a $900 order that hasn't been paid but gets included in all my reports. A web-based order is not a legal obligation or commitment to pay.

[softpac]

That's a very good point. We are operating on a cash basis at the moment. However, when the business turns over $1m, for Australia businesses they then have to report on an accural basis. So in the future, I may need the sales report to be based on order date. (it doesn't hurt to dream big!)

Your post got me thinking. Rather than having 2 reports, or a toggle on the report to select between order date/paid date, maybe there should be a setting under Configure/Store where a user selects Accural or Cash. Depending on the setting, all relevant reports are then adjusted accordingly.

Although, I disagree with your point about not allowing unpaid orders, because some sites may may want to allow for fax/mail/phone orders including payment by checks/cheques. Even paying by credit card via the web site is not guaranteed money in the bank, because it is technically unsettled and is quite possible for your bank not to settle it for a variety of reasons, even though the transaction may have been authorised and captured at the time of order.

[AbleMods]

To further muddy the waters, some organizations only consider it a sale when the item has shipped. Since all shipments are FOB origin, they consider the shipment a legal transition of ownership thus the sale is complete.

So, depending on the whim of management, you could be looking at an order date, payment date or ship date as the prime identifier for a sale.

I've written several commission systems in my career - I usually cancel my lunch when this particular subject comes up in a planning meeting