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In the language of Business Intelligence and Performance Management, there is a term called Fact. Fact is the basic measures which we use in our dimensional models. These measures are the building blocks for key performance indicators. To highlight the difference, one can have the sales revenue as a Fact and Sales Value Productivity as a KPI. Sales Revenue is a basic measure which is linked with every transaction, whereas sales value productivity is for a portfolio. Other example for measure vs. KPI is turnaround time (TAT). TAT can be a Fact, whereas the average TAT is a KPI. Each different fact should be named differently
Sales Revenue is essentially the financial income of the company by selling its products and services. There can be other sources of income for an organization like investment income. This page will focus on sales revenue and its various shades.
Financial Sales Revenue
This is the technical definition of sales revenue, used as a universal reference. This is the revenue which is booked financially and recognized as income and can be booked into the profit and loss account of a company. This is essentially the value of the invoices raised and accepted by the customer (along with other documents like goods receipt signed-off by the customer).
Sales Revenue net of Taxes
This is the real revenue which the organization has got. Therefore, this can be a good reference for calculating your gross and operating margins. Many companies use this measure as a base for doing all sales revenue related analysis.
Sales Revenue net of shipment
This can be a very material component, when you talk about commodity products like Metal Ore, Agriculture produce etc. You can break your sales revenue with this component showing separately to give a better view.
Break-down of the sales revenue
Your sales revenue can be broken down into individual components. This includes core product, annual maintenance, installation & configuration and consulting. You may have these components as separate product lines.
Sales Revenue net of Returns
For a period, an organization can look at the total goods sold or total goods sold minus the goods returned. Sales revenue net of returns is the true financial picture. Sometimes, near the month end, sales staff registers the sale to meet the higher incentive slab. However some of these goods are returned in the next period.
Sales Revenue Pipeline
This is not the pure definition for the sales revenue, but is used extensively in the sales analysis and reporting. These are the sales, which are not yet financially recognized, but are of high confidence. For example, the raised purchase orders, or the goods shipped but not yet received by the customer.
This Fact is used for forecasting the future sales revenue and also gives an indication of sales productivity for the period. For example- If you have 10 million USD sales this month, but also 30 million USD pipeline, it is a indication of healthy sales activity. |
