E.1 . Sales (turnover) and output
15.57. Sales and turnover are terms that are used interchangeably in this Guide. They refer to the totals invoiced for the sales of goods or services rendered, including all duties and taxes, excluding consumption and sales taxes (i.e. VAT type taxes). Sales/turnover also includes all other charges passed on to the customer (transport, packaging, etc.), even if those charges are listed separately in the invoice. Reductions in prices, rebates and discounts as well as the value of returned packing must be deducted. Charges for the use of intellectual property are included. Income classified as other operating income, financial income and extraordinary income in company accounts is excluded from turnover. It is important to note that revenue of long-term contracts, such as building contracts, should be recognized by reference to the stage of completion of the contract. For insurance, turnover/sales correspond to gross premiums written and, for pension funds, they refer to total pension contributions. For financial services, excluding insurance, pension funding and auxiliary services, turnover refers to the explicit fees charged for the services provided (fees and commissions receivable) as well as interest and leasing income, income from shares, net profit on financial operations, income on foreign exchange transactions and other operational income.
15.58. The variable sales or turnover is usually easy to compile because it is easy to collect and, besides the usual adjustments for non-response, underreporting or grossing-up, no specific calculations are needed to produce the final data. In addition, sales or turnover generally offer more options for disaggregation, in particular for breaking down by service product.
15.59. As indicated above, output is a preferred variable when considering the mode 3 supply of services. Output is a superior and more refined measure than sales for most purposes and is recommended as the preferred variable for compilation. Following the 2008 SNA, output differs from sales mainly because it includes changes in stocks of finished goods and work in progress. In general, such considerations do not apply to services. There are also differences in measurement applicable to wholesale and retail trade, insurance and financial services industries. For affiliates in wholesale and retail trade, insurance and finance, sales may include non-service elements or may exclude the value of services provided without an explicit charge.
15.60. For wholesalers and retailers, output of services should be measured as trade margins: wholesale or retail sales of goods or services less the goods and services purchased for resale. While not in the core list of variables to compile, and even though it is only mentioned as a suggestion for compilation in MSITS 2010 (paragraph 4.65), compilers need to make sure that data on purchases of goods and services for resale in the same condition as received are collected or can be estimated.
15.61. For insurance, international economic accounting guidelines recommend measuring output as gross premiums earned plus premium supplements minus estimated claims incurred (either estimated claims or benefits due) and, in the case of life insurance, minus the net increase in life insurance actuarial reserves. For financial intermediaries, in addition to the explicit fees charged, compilers should include a measure of implicit service fees as well as financial intermediation services indirectly measured.
15.62. In general, output statistics can be compiled directly from data collected (i.e. services sales or turnover) or extracted from existing sources, making necessary adjustments and taking the above points into account. The latter may require additional data collection, data from outside sources and estimation methodologies. The suggested practice is as follows:
(a) Output is the preferred measure, but sales/turnover is easier to compile as a first step and may offer more options for disaggregation. For wholesale and retail trade, insurance and finance, additional calculations are needed to compile output;
(b) Activity/product breakdown:
(i) Output or sales/turnover should first be compiled by activity;
(ii) A breakdown of output or sales/turnover into total goods and total services products for each activity should be provided;
(iii) As a long term goal, compilers should strive to produce product detail, if possible compatible with EBOPS 2010;
(c) Output or sales/turnover should not be broken down only by country of UCI for inward or by establishment of affiliates for outward, but a distinction should be made as to the output actually delivered to clients in the host economy. This is further elaborated in the section on trade variables.
Next: E.2. Value added