Monday, September 15, 2008

Using VIC: from Project to Sale

In my last Using VIC post, I described how to use Projects to manage complicated groups of tasks. These can be generic projects of the sort you'd use Microsoft Project for; or Sales oriented methodologies to help you manage a sale from working the lead to closing the contract. I also promised I'd show you how to turn the Project into a Sales Order and an Invoice.

Remember that a Sales Project includes a Products tab that allows you to put together a wish list of products. This helps you estimate the value of the potential sale. When it comes time to complete the sale you may want to turn this list directly into a Sales Order to reduce the amount of typing you can do. In VIC, this couldn't be easier. You simply select the Project in one of the Views or open it, then pull down the "Create" action menu, then select "Sale".

That's it. All of the customer and product information will be included in the new Sales Order. You should edit the pricing to make sure the taxes are calculated properly (at a minimum, just edit then resave the prices). When the Sales Order is approved, you can turn it into an Invoice with one click (while the Sales Order is open for editing, just select "Make Invoice"). By default, any project is turned into a Sale. However, you can save that sale as an Estimate (a quote) by clicking "Make Estimate").

I'm tempted to end the post there, because we've pretty much accomplished the task. But let's take some time to look a little more closely at the Sales database.

VIC Sales is not, not, not an accounting package. It does generate sales orders and it does generate invoices; but these features are basically there because I've been largely dissatisfied with the general state of open source accounting packages for small business. I'll resist the urge to rant about the reasons here, but the ironic outcome is that VIC Sales, poor as it is, is a placeholder for the accounting system that I'd like to use, but which nobody yet produces.

VIC Sales was originally conceived as a place to simply list, in a convenient form, the major sales we've made to each customer. That allows us to measure sales performance and get some reports. If there were an open source accounting package that I actually liked, I would code a link to that to simply import the data from accounting. If you're adapting VIC CRM for your company, I recommend that's what you do... have an interface to pull in your sales info from your accounting system. The reason for this is that VIC allows you to have Categories and additional metadata that your accounting system may not have; and because the people who need the reports may not have access to your accounting system. Since not everybody is going to have an accounting system or want to modify VIC, I've included the ability to create and edit rudimentary Sales Orders and Invoices here. A small consultancy may be able to manage with just VIC CRM or VIC + Quickbooks/GNUCash/TurboCash. A lone consultant or salesman can certainly do so.

I'm going try to scare you off first. Here are reasons to not use VIC CRM for accounting:

  1. There is no audit trail.
  2. The method of calculating taxes stinks.
  3. No General Ledger, Purchase orders, or Accounts Payable.
  4. Accounts receivable is rudimentary.
  5. There is no audit trail.
  6. There is no proper breakdown by accounting period. VIC displays a view by calendar year and month, but that's about it.
  7. There is no audit trail.
  8. It conforms to no generally accepted accounting principles.

That said, there are plenty of small businesses that generate invoices using Microsoft Excel templates. If your business is one of those, you'll probably find VIC Sales to be a big step up. And I can think of some fairly good reasons to use it for generating invoices and then just entering the summary information into QuickBooks.

First, VIC keeps the entire sales process in one interface. Your Product and Sales brochures in the VIC Library form your inventory; so if you keep those current for sales, they're also current for billing. That works in reverse as well. If you keep your inventory straight, then your sales materials will never be out of date.

Also, VIC CRM does a "stupid pet trick" that no accounting package I know of can do... it can treat your Calendar entries as if they were inventory! It's a bit like Time Billing, only easy. Here's what happens: say you're consulting. You've made several phone calls on behalf of a customer and perhaps you've made a couple of site visits. You've documented the activities in your VIC Journal and you've checked the "Billable" checkbox for each. The VIC Index contains a bill rate for this customer. When you create a Sale for this custimer, then you can add products from the VIC Journal instead of the products file. The inventory list displayed will be all unbilled JournalEntries for that customer. When you add it to the Sale, VIC will calculate the charge based on the actual duration of the activity as documented in the Journal, times the bill rate. No more estimating how much work you've done. VIC knows. Doing this will mark the original JournalEntry as "billed" and it will link that JournalEntry to the Sale or Invoice. That way, as you browse your Journal you can immediately see the invoice that included that JournalEntry as a line item.

If you're like me, sometimes you do work and purposely don't bill for it. Or you may have a customer on a support contract. If so, I recommend that you still generate an Invoice. The reason is simple: If you don't bill for services the customer has little idea of the value of the services he's receiving from you. But with VIC you can list every single moment you've spent on that customer's account. Discount it 100% so that you're sending a zero-balance bill (the line items will still show the value), and include a comment regarding professional courtesy or referencing their support contract. Even if you don't do this periodically, the ability to do this can be invaluable when it's time to renew the support contract. The sales pitch boils down to "here's what you would have spent this year without a contract..." and the customer can easily make his decision.

VIC Sales lends itself easily to workflow. There's no particular workflow built-in (this is the sort of thing that differs from company to company, so it's a custom feature), but VIC Launch contains a dashboard that lets you work as if it is. The Financials dashboard is split into four quadrants. The left side represents potential income; the right side represents income owed to you. So the four quadrants are as follows:
  1. Unbilled Journal Entries (upper left). These are Journal entries that are in a "complete" status and are marked as billable, but haven't been marked as billed. They represent potential revenue for which you haven't billed.
  2. Open Sales Orders (lower left). These are sales orders that haven't shipped. "Shipping" in consulting can be a flexible term. I use it to represent work that has not yet been approved.
  3. Invoices not sent (upper right). These are shipped, but not yet billed. Your pending action here is to print and mail invoices. I print them to PDF and email them.
  4. Open sent Invoices (lower right). These are invoices for which you're awaiting payment from the customer.

Once an invoice is paid off it drops off of the Financials dashboard. Also, estimates are not displayed in the Financials dashboard (Estimates are "what ifs" and do not represent potential income). All of these dashboard views are summarized so you can see totals per customer and a grand total. And of course, with Domino Designer you can tailor them to your needs. A manager viewing this dashboard on the server will see the numbers change as the documents are processed by the sales and/or accounting staff.

So VIC Sales has a few things working in its favor. But as accounting goes, my official statement is that it might be better than nothing at all.

For robust accounting I suggest your company standardize on a real accounting package. Larger companies would do well to use VIC as a method of having the salespeople communicate sales to the accounting staff. They can then create invoices into a standardized accounting package. Customization could automate this link.

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