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How to adjust our revenue management strategy.
We’re an independent tile shop that resells several different types of designer tile. We are about to book our biggest account ever, which is great, but we’re a little concerned with how to adjust our revenue management strategy. This account will take care of 75-80% of our annual revenue forecast. My question is this: If you were in our shoes, what would your revenue management strategy be? Would you try to book & deliver the rest of the revenue as soon as you can, or would you spread it out across the remaining months. Any helpful ideas would be great.
Best Answer
-1
Posted on
April 24, 2010
You have worded your question in an inprecise way and it is unclear how to answer you. I don't believe you are seeking advice in revenue recognition. If you are asking how aggressively to seek revenue from other customers, I cannot understand why the new order has much to do with the other customers and when or if they might need your merchandise. I would urge you to clarify your question that would make it easier to pinpoint an answer helpful to you.
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Carl, I'm going to assume that by "revenue management" you mean revenue recognition. If that's the case, then you probably have accounting policies in place that will tell you how to recognize the revenue. Under an accrual system, you should take the revenue essentially when the tiles are delivered. If there's a high level of risk associated with the collection of the receivables associated with your sale, then you may want to defer some of the revenues.