Explanation of expenditure and revenue processing cycle providing examples related to your selected company.
Coca-cola is one of the multinational companies with its main headquarter in the United States, and it operates in numerous countries all over the world. This corporation is manufacture, retailer, and at the same time marketer of non-alcoholic beverages and syrups. Basically, its main product is Coca-Cola, merchandise that was invented by a particular pharmacist known as John Stith Pemberton in 1886, Atlanta. Due to the world pandemic that has been caused by the deadly virus, Covid-19, Coca-Cola is among the numerous companies all over the word that has been affected in one way or the other. Both its expenditure processing cycle and the revenue processing cycle has been affected by the Codid-19 Pandemic as illustrated bellow.
a). Explanation of expenditure and revenue processing cycle providing examples related to your selected company.
Based on the revenue processing cycle of the chosen company, Coca-Cola, the sequence involves identification of the whole process of managing the revenue from payers based on the product sold the period is in five significant stages where it starts form selling of the company products, documenting the order, delivering the products, billing and lastly, collection of the payment form various clients who are major retailers or even individual consumers (Zhavoronkova, Miziuk, and Zhavoronkov, 2020).
According to the Expenditure Processing Cycle of Coca Cola Company, it involves all activities that relate to the acquisition of and payment for goods and services. The expenditure processing cycle involves assets of activates that rotate form the purchase of and payment of the company products. The process majorly involves four main stages, ordering the necessary materials, supplies, and services, receiving documents, Approving the suppliers’ invoice and lastly, Cash disbursements:
b). Provide examples of some of the activities/procedures involved in the expenditure and revenue processing cycle of your selected company before the Covid -19 outbreak
Revenue Processing Cycle
- Selling the product
The Coca-Cola revenue processing cycle mainly start by selling its products to the retailers. In this part, the sales team engage in the creation of a sales proposal or presentation top their clients all over the world. The proposal contains various terms and conditions regarding the sales, for example, the market price, incentives, warranties, expected interest among other sales terms. Additionally, they will make a sales list of all the available products and present it to the retailers.
- Documenting an order
The second stage of revenue processing cycle of Coca Cola is documentation of the order. In this stage, the sales team will have to present the marketing document to the various retailers who will have to have a look at it, they will then have to accept it the way it is or have to make some necessary changes of possible before they sign the document as a form of agreement to the deal. Once they sign the document, the terms on the documents cannot be changed. The retailers will also have to look at the sales list that contain the available products or brands and list all the items he or she needs in relation to quality and size.
- Delivering the Product to the Retailer
In the third stage, the sales team will have to deliver the listed product to the retailer as agreed. The products have to be delivered within the stated time period to avoid necessary irrelevancies that may lead to costly mistakes. In case the client need a new contract due to certain changes, the Coca-Cola branch manager will have to approve the stated change.
- Billing
Once the goods are delivered, the company through financial department will then have to send the bill containing the total cost of goods delivered to the retailers for payment. In relation to the organizational guidelines, the bill should be settled within forty-eight hours upon delivery of the products.
- Collection
At the last stage of Coca-Cola revenue cycle, the company involves in the collection of all its outstanding invoices which must be done within forty-eight hours. The company’s account receivable team has to design a list which indicates where all the uncollected funds are.
Expenditure Processing Cycle
- Ordering The Necessary Materials
In the first stage of Coca-Cola expenditure and revenue processing cycle, it involves ordering of the necessary materials which are used in the production process. The accounting team need to determine the quantity of raw materials needed in the production process. The company makes a purchase order to the preferred supplier from their inventory master file for each item to be purchased.
- Receiving Materials
While receiving the purchased goods, the auditing team has to determine the quality and quantity of the purchased goods to determine if they are of the company’s standard and as par the requested amount.
- Approving the suppliers invoice
Upon receipt of the supplier’s invoice, the company’s account payable team will eventually log into their system and compare the presented invoice to the authorized purchase orders to determine if the invoices are valid for payment.
- Cash disbursements
After determining the validity of the invoice, the suppliers’ can then be accepted based on their predetermined payment terms. When the payment date reaches, Coca-Cola then makes payment through bank cheques or even electronic fund transfer.
c). How has Covid-19 affected or change these activities/procedures identified in (b) above. Provide arguments for and against the effects of Covid-19 on the expenditure and revenue situations of your selected business
The Covid-19 has affected the above listed activities that make up the Coca-colas revenue and expenditure process cycle in various ways, for instance, it has lengthened debt collection period with majority of retailers taking longer to pay as required. The company purchasing process has also been affected with some of its preferred suppliers closing down due to government orders in some of the country’s that it operates or it has its branches. Law sales is also being experienced, with most of the retailers taking long to empty their stores. Basically, the pandemic has affected the general performance of the company process cycle. This has been caused by the restricted movement of people in various countries, which has created several retailer shops to be closed down, and even consumers prefer to purchase other essential things rather than the company products, which are refreshments.
d). In your opinion, how will Covid-19 influence future TPS systems (expenditure and revenue processing cycle) of your selected company?
Covid-19 will be able to affect the company’s future transaction process system by altering both revenue and expenditure process cycle in various ways, for instance, it will affect the sales process in the sense that the company will experience law sales records as a result of less number of retailers who are willing to take in the products. This will be caused by a significant reduction of consumers of the company products due to the Codid-19 pandemic. As a result, the company will be forced to reduce the funding on sales activities to match the decreasing demand. The collection process will also be affected by the pandemic. Based on the company’s policy, the payment is to be collected within forty-eight hours upon delivery of the products. This policy will be affected by a number of trailers taking long to pay, and even some of them will be requesting for anew term or contract to enable them to pay after-sales. With the effect on the payment collection process, the creditor’s books will increase with the increasing number of defaulters, and as a result, sales volume will decrease.
Lastly, the ordering process will also be affected by some of the suppliers that have closed down in certain countries where the company has its branches due to government orders as a result of the Codid-19 pandemic. As a result, the company will not be able to make new products due to a lack of necessary materials for the production process. The receiving material process will also be affected where the company will receive less quantity or even quality of materials than what it orders for, and this will be caused by various factors that have been experienced as a result of the Covid-19 pandemic.
e). Reflecting on the Covid-19 pandemic, give your personal judgment on any lessons learned about the effects of Covid-19 on TPS (expenditure and revenue processing cycles) of your selected company and provide some suggestions that will help your chosen company deal with similar problems in future.
Based on the personal judgment in relation to the lessons have learned from the Covid-19 effect on the company’s expenditure and revenue processing cycles, food processing companies, like Coca-Cola, should produce a variety of products rather than only manufacturing refreshments drinks only. This is due to this pandemic period; the majority of the middle and low-class individuals who also form a large share of the company’s global consumer base do prefer to spend the little or available amount they have on foods and not necessarily on drinks. This has led to the low purchase of the product, which has reduced sales. Additionally, the company should have a variety of suppliers for some of its essential products that are used in the production process, and this will assist in ensuring the continuous production of the raw materials even when the leading supplier runs out of stock during such pandemic situations.
Additionally, another valuable lesson learned is on the effective management of organizations through better coordination and communication processes. This factor will ensure the smooth coordination of various departments or even branches of the same company to provide necessary assistance in case of a shortage of raw materials. In cases of the pandemic as this of Covid-19, the company branches can assist other departments that might run short of certain items like raw materials given the fact that the majority of multinational companies like Coca-Cola do make significant decisions within the member country headquarters. All the accountings are done within those countries, and profit and loss determined. Additionally, business organizations should employ the use of an active process control system that will ensure effective control in various sectors that involve better input control, process control, and output control. Some of the dynamic control systems that organizations should apply are the Transaction Processing System, which ensures an effective payroll system, order processing, and control system (Khanam, Siddiqui, and Talib, 2016). Additionally, other useful methods include Management Information System and Decision Support System.