Revenue Accounting Success Story

Goss & Associates, LLC

Revenue Accounting Success Story

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AIRLINE OVERVIEW

Please visit our Web Site: Goss & Associates, LLC

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Started operations in the 1960’s

Based in the Pacific

Served 25 Cities

1,500+ Employees

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Fleet

Operated 29 Aircraft

Aircraft mix included B747, DC10, B757, B727 & B737

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AIRLINE’SREVENUE ACCOUNTING OVERVIEW


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Annually the airline processed an average of - 2.5 million flight coupons

- 1.5 million audit coupon

Five Computer Reservation Systems (CRS)

processed 95% of the airline’s sales

Flight coupons were used an average of 7 to

12 days after sale

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Airline used a sales based accounting process

Airline had unprocessed sales backlog -12

plus months

At month end, the airline experienced

unmatched flight coupons ranging between

90% and 95%

Airline’s revenue accounting balance sheet

accounts were not reconciled

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80% of airline’s revenue was net of both first and second level commission First level is defined as traditional

commission Second level is defined as volume incentive

Airline’s sales based process provided coupon level revenue information

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PROBLEM DEFINITION


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Conflicting internal opinions regarding:- Staff size - Automation- Departmental management competency

Needed independent expertise to:- Evaluate current situation- Provide facts- Recommend actions

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Given their ticket volume, more process staff was required to operate the current system: Maintain current volumes Audit sales to recover under collected sales Audit to recover over paid commission Reconcile balance sheet accounts

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Long term, the airline needed to invest in automation to:

Reduce staff and human errors Recover under collected sales through fare

audits Recover over paid commission through

audits Reconcile balance sheet accounts

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In addition, investment in automation was needed to: Improve commission tracking Simplify payment process Take revenue data to segment level

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ACTION PLAN


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Eliminate BACKLOGS: Sales Account Reconciliation

Invest in automation Reengineer revenue accounting

process

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ELIMINATE BACKLOGSGetting Revenue Accounting Current

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Outsourcing was used to: Maintain current revenue accounting

process Eliminate sales processing BACKLOGS Data enter unprocessed sales reports Capture unprocessed BSP long sale files Account reconciliation using technical

revenue accounting experience

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AUTOMATEInvesting in Revenue Accounting

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Found a Revenue Information System that used all 5 Computer Reservation Systems: Audits fares and commissions Reduces staff requirements Feeds revenue data to other systems Receives data from other system providers

like ATPCO and other airlines

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PROCESS REENGINERINGReinventing Revenue Accounting

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The reengineered revenue information process provided: Current technical revenue accounting skills Revenue Analysis Efficient processing of documents and data

Reduced process staff and increased analytical staff

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Revenue Accounting’s Future


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Commit to constant vigil

Commitment to improve process automation

Insure revenue accounting continues to be: Cost efficient A complete information provider Never backlogged

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Revenue Accounting Success Story


Documents

Revenue Accounting Success Story