A sales report is an essential management tool that helps you answer many questions about the health of your business.
The objective of a sales report is to transform the data of what the company sells into information that supports or allows the management of products, customers and products, as well as a rapid adaptation of the company to the market.
Let’s learn more about the characteristics of a sales report and how you can do it.
Also read: The best sales management methods
What is a sales report?
A sales report is a record of your sales activities for a given period. Depending on the type of sales report, you can include the following data:
- The names of your vendors
- Realized Sales vs. Sales Quota
- new accounts
- Comparisons between the current and previous periods, etc.
A sales report can be used to forecast growth and potential problems by extrapolating the data it provides.
These reports are usually prepared by sales directors and commercials. They are then sent to upper management, who want to be able to easily understand the status of sales.
Advantages of creating a sales report
Here are some benefits of creating a report to measure sales:
- You know the trends and sales cycles:
- You discover what works well and what doesn’t;
- You can have a balance of the level of profitability;
- Analyze the ratios;
- Make projections and be able to track the progress of your efforts;
- Qualify your customer base; identify the best profile;
- Find out what attracts customers, where they come from;
- Evaluate your portfolio of products and services;
- Manage your inventory;
- Determine if your goals are being met;
- Set better prices, etc.
Uses of a sales report
The form that the sales report takes, the information it contains and its treatment depend above all on the use given to it and the management objectives pursued. Therefore, these uses can be numerous. Here are some examples:
- Management support and customer service
In this case, the sales report usually takes the form of a history of the quantities of each of the products purchased by the customer. This helps us to know the purchasing habits of each client and allows us to work more efficiently and satisfactorily with them.
If we are lucky enough to work with a system that works in real-time, we can obtain, from a given date or period of time, the number of products purchased by each customer from a given date.
The customer’s purchasing history over several years can also help us understand the evolution of the products.
- Product management support
Here, the sales report takes the form of an annual report by product and product group. Sales are expressed in quantity and money.
The format is usually part of the product definition. Organizations with a sophisticated database can group products by color and other product features that are included in the database.
When done over several years, the sales report can be used to measure trends in the company’s products and get an accurate picture of the composition of its sales.
Knowing the real average price achieved by a product is the basis for measuring the real margin achieved by a product or, even more so, by a group of products. It is a key element when deciding the scale of production.
Also read: How to calculate sales estimates?
How to create a sales report
Obviously, you can rely on the information technologies integrated by the company, accounting system, billing system or inventory management system. The amount of work and the speed with which information is obtained varies depending on the resources available.
Although the company’s resources may be limited, there is always an easy way to obtain valuable information to support management in meeting sales objectives.
I share some of the steps to create a sales report :
Sales data record
Normally, sales data is recorded in a database or in a simplified form in a spreadsheet. Ideally, this registration should be done automatically at checkout or directly from the cash register. The database may or may not be integrated into the company’s accounting system.
Sales data in dollars per customer, and on credit are accounts receivable. If the business only sells on credit, an annual sales report can be obtained from our accounts receivable register.
The registration of sales must be done with all the characteristics related to the product, the client and the company from which they come. The sales report must contain not only monetary values but also the unit quantities if you want to carry out correct inventory management, know the real production losses, budget the quantities, etc.
The sales database must therefore contain a sufficient number of fields to fulfill what has been previously defined as a sales report. It is the quality and ease of use of the database that largely determines the value of an information system (accounting, billing, inventory).
The required fields or series of fields will therefore be the following:
- Fields to identify the client (name, address, etc.)
- Fields to identify the product (name, code, format, group of products to which it belongs, etc.).
- Fields for quantities (dollars, number of units, basic standard units, weight, volume for transport, etc.).
It is important to remember that the architecture and definition of the fields of our sales-related database will determine what we can get in our report.
The integration of this database with other information systems (accounts receivable, inventory accounting system) will have a significant impact on the amount of work required to maintain them.
Information system and sales report
At a minimum, sales should always be recorded not only in monetary value but also in the number of physical units and/or equivalent units. The choice of an information system must take these elements into account.
For many companies, billing and inventory control operations are especially critical and the choice of system is based on these two facets.
Typically, these systems can produce a wide variety of sales reports. Ideally, the company has systems that allow managers to instantly obtain the information that helps them produce, sell and serve customers better.
Create a sales report with the help of a dashboard
A dashboard is the best tool to create sales reports that help you visualize your performance. You can have a report in real-time, with your updated information, since you can have data from different sources connected to the same platform.