The commercial area of the company is in charge of putting the products and services generated by the company in its production process, therefore it is necessary to implement an efficient control within its structure
The commercial function is considered, in functional terms, as the last stage of the production chain, which begins with the hiring of material and human resources, continues with the transformation of said resources into products and services and ends with the placement of these in the market.
Based on the above, it could be said that the results obtained by the company are largely dependent on those obtained in the commercial area, because when the cycle is completed is when they are truly measured and specified.
Just tailored
The preparation of budgets and control of the commercial area of the company must be subject to the business policies proposed in the management plan
The budget of the commercial area
There are two types of budget in the commercial area:
- The budget for sales targets and the budget for operating expenses.
Both budgets are not related in the sense that, in general terms, variations in sales are not transmitted to the same extent, to operating expenses. In other words, an increase in sales volume does not necessarily imply a similar increase in operating expenses.
That is why, for this type of analysis, it is necessary to prepare and control, separately, both types of budget.
The commercial area is generally recognized as an income center, whose mission is to obtain the sales income that has been previously budgeted as a product of physical sales quantities and unit prices, all of this for each of the products and for each of the sales channels considered.
This even in the case that the sales managers do not have jurisdiction over the sales prices that are set at the central level. In this case, the revenue center becomes a sales center.
The conceptual foundation is that the production, distribution and after-sales areas turn to the commercial one, budgeted unit costs and in no case, those actually produced.
The control of the commercial function has to provide an evaluation of the behavior of this function in which the unit cost of sale must not enter
The reason for the above behavior is twofold:
- The deviations between the budgeted unit cost components of the unit cost of sale and the actual cost are attributable to areas other than the commercial area The commercial area needs to have a previously approved and accepted unit cost of sale in order to articulate a pricing policy and Therefore, it is not reasonable to imagine real cost transfers that, logically, would be different for the same product at different points in time.
Management control of the commercial area
For any static control model, that is, referring to the same period, a control equation is created to measure possible deviations such as the difference between the objectives and reality. In this application, the directive functions of the future design of the company, coordination of human, material and financial resources and taking corrective decisions on the set objectives or on the people involved in the reality produced must be synthesized.
The real behavior of the commercial area is expressed through the product of the real quantity of sales and the real unit margin of sales.
The deviations that are presented in the analysis are compared to those related to sales margins or also called economic deviations and, on the other hand, physical deviations, which reflect a difference between physical, real and budgeted volumes.
The economic deviation is not illustrative of the commercial management because, the sales margins contain a variable, the cost of sale, that is outside the influence of the commercial management.
This management control can be called internal in the sense that it reports on the variations produced by each product in its competition with the other products of the same company in order to achieve a greater specific weight in the production and marketing plans.
But an external management control can also be carried out, in which the deviations depending on the market of a product and the relationship with it are explained, taking into account the variation that has occurred in the total market demand for that same product.
