Recording your sales using your bottom-line income is an easy process, but it doesn’t give you much information about the how, why, when, where and who associated with your revenue generation. Tracking your sales using parameters that give you information about how your sales are generated can help you improve your business practices and increase your profits. You don’t need to be a computer whiz to track how much you sell and how you sell it on a simple spreadsheet.
Develop Information Categories
The first step in creating a system for tracking sales is to develop the categories of information you want. These categories can include sales by payment type, distribution channel, store, sales representative and product type. Keep track of sales financial information by tracking sales by profit margin, units sold, gross revenue, price point and gross profit. Create a spreadsheet that lists all these categories, dividing your spreadsheet into sections that contain similar data categories, such as distribution type or sales reps. Create fields that track your sales by month, quarter and year for comparison purposes.
Different payment methods come with different costs, such as taking credit cards that cost you vendor fees. Track your sales by payment type, which includes cash, credit card, check, PayPal and online transaction. This will help you spot trends and allow you to offer the payment options your customers want most.
By Distribution Channel
Track your sales by the type of distribution channel you use. Distribution channels include methods of selling such as your own website, a third-party website that sells your product, brick-and-mortar stores, wholesalers, distributors, catalogs and sales reps. Different distribution channels have different direct and administrative costs. Knowing how much revenue each sales channel brings you makes it possible to calculate the profit margin and gross profit each one generates, so you can decide if you need to expand or drop certain channels.
If you sell from more than one place, track sales by location, including individual stores, mall kiosks, geographic territory and states, which might have different sales and income tax rates. With this information, you can calculate your profit margin per sales area and determine whether you need to raise prices in certain locations or stop selling in specific locales.
By Product or Service
If you sell more than one product or offer more than one service, record your sales by product or service type. Like distribution channels, different products and services have different levels of production, selling and overhead expense, and they need to be analyzed separately to show their contribution to your profit.
Tracking Sales by Billing and Collections
Create a system for recording sales that coordinates the creation of invoices, generation of receipts, tracking of accounts receivable and recording of payments received. If you have a sales department, coordinate the forms the sales representatives use with your accounting department. Track your sales process to create good cash flow by eliminating potential hiccups that delay the sending of invoices or collection of payments.