When is a sale a sale?
When the customer places their order – No.
When you deliver the product or service to the customer – No.
When they are due to pay you – No.
When your sales exec says they will pay today – No.
When they say they’ve paid you, it’s not showing yet in the account – No.
When the customer has unconditionally accepted your product or service and their cash is in your bank account – YES.
Don’t pay commission or bonuses on that sale until the cash is in your bank account. And even then there may be some exceptions - see Recognising Revenue for more granularity.
Remember – your sales exec is responsible all the way through the value chain - from taking the order to making sure the product or service goes out, the invoice is issued and cash is received. Even if their end-of-month bonus or commission depends on it.
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