Saturday, January 24, 2009

So what is the definition of "SALES"

What is Sales?

I want to know the exact definition of Sales. According to wikipedia (http://en.wikipedia.org/wiki/Sales) sales is defined as "A sale is the pinnacle activity involved in selling products or services in return for money or other compensation. It is an act of completion of a commercial activity". OK. Now I have two problems with this definition. If no cash is involved in the transaction, I mean it is a credit purchase, I can't be treated as sales.

The Investorwords.com (http://www.investorwords.com/4365/sales.html), defines sales as "Total dollar amount collected forgoods and services provided. While payment is not necessary for recognition of sales on company financial statements, there are strict accounting guidelines stating when sales can be recognized. The basic principle is that a sale can only be recognized when the transaction is already realized, or can be quite easily realized. This means that the company should have already received a payment, or the chances of receiving a payment is high. In addition, delivery of the good or service should have taken place for the sale to be recognized".

This means the invoice pending must be closed to recognise a invoice as a sales or the purchaser must have a post dated cheque or any other guarantee for the payment against that invoice. If the payment is due or the customer cheated the supplier, whether the sales should not be consider as a sales? Consider one event for the danger of this definition. Shop A bought 10 motherboards from Delaer B and sold all the motherboards to 10 different end users. After that Shop A was closed down and wind up with due to Dealer B. So the slaes invoice of Delaer B was not closed. If that invoice is not considered as a sales what about the end user who bought from Shop A?

But most of the dictionaries define sales as "The exchange of goods or services for an amount of money or its equivalent; the act of selling".
I'm facing a big problem against the word sales now. I bought a Acer 22" TFT monitor on 3rd December 2008 against a purchase order from a customer. Before purchase the product, that customer wanted to test it. When we opened the pack and tested, we found a small easily viewable dot in the screen. The customer refused to buy it, saying it is a manufacture fault. I contacted my supplier Pelikan Office Equipments Pvt. Ltd., Chennai. They said that they are responsible only for sales and not service and this must be sent to Acer for service. I called Acer, Chennai. Acer, Chennai asked me to register a complain to customer care cell. I asked why should I register this product to my name, when this should be sold to an end customer. They said they don't know anything, just they want it must be registered through a customer care cell only. I argued with them that I'm not a customer (end user) of this product. Whatever you say they repeated only one line to all my questions. "THIS IS THE POLICY OF ACER". So, I wish to create a common definition for Sales, Service, Customer, Service after Sales in India that must be accepted by all the companies in India, whether it is Acer or HP or Epson. How the Governement or Channels allow each and every company have their own definition and policy for sales and service.?

A sale must be defined as "A sale is the pinnacle activity involved inselling products or services in return for money or other compensation including credit. It is an act of completion of a commercial activity and has a movement of goods or service". And a sale is a movement of goods in a line which starts from manufacture company and ends only at end user.
What do you think. Its OK? or we must add or remove anything with it.

Next we discuss about who is the customer to a company?

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