Revenue Management

Quick Reference Guide

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NetSuite Version 2021.2
Table of Contents
Quick Reference Guide ......................................................................................................................................1
Navigating the Quick Reference Guide ......................................................................................................................... 1
Process Diagram ............................................................................................................................................................ 1

Table of Contents ..............................................................................................................................................2

Overview........................................................................................................................................................................ 3
Revenue Management............................................................................................................................................ 3
Business Case .......................................................................................................................................................... 3
Revenue Management Lifecycle ............................................................................................................................. 4
Revenue Recognition Rules ........................................................................................................................................... 7
Create a Revenue Recognition Rule........................................................................................................................ 7
Fair Value Pricing ......................................................................................................................................................... 10
Add a Fair Value Formula ...................................................................................................................................... 10
Add a Fair Value Dimension .................................................................................................................................. 10
Add an Item Revenue Category ............................................................................................................................ 11
Create a Fair Value Price Record........................................................................................................................... 11
Item Configuration ...................................................................................................................................................... 13
Set Up Item Record with Revenue Attributes....................................................................................................... 13
Create Revenue Arrangement .............................................................................................................................. 15
Managing Revenue Arrangements .............................................................................................................................. 18
Add a Date to a Revenue Arrangement ................................................................................................................ 18
Update Revenue Arrangement ............................................................................................................................. 18
Merge Revenue Arrangements ............................................................................................................................. 19
Revenue Recognition Plans ......................................................................................................................................... 20
Update Revenue Plans .......................................................................................................................................... 20
View Revenue Plans .............................................................................................................................................. 21
Revenue Allocation ...................................................................................................................................................... 23
Review the Allocation on a Multi-Element Arrangement ..................................................................................... 23
Revenue Recognition for Projects ............................................................................................................................... 24
Add a Project to a Sales Order .............................................................................................................................. 24
Project Revenue Rules .......................................................................................................................................... 25
Month-end Processing ................................................................................................................................................ 28
Create Revenue Recognition Journal Entries ........................................................................................................ 28
Create a Reclassification Journal Entry ................................................................................................................. 29
Reconcile Deferred Revenue ................................................................................................................................ 31
Key Reports.................................................................................................................................................................. 33
Review Standard Revenue Management Reports ................................................................................................ 33

Quick Reference Guide 2

Overview

Revenue Management
Advanced Revenue Management (ARM) is an integral component of NetSuite order-to-revenue
workflow. It allows revenue managers to source from multiple sales contracts and non-sales documents
such as project, subscription or 3rd party transaction record; and construct a consolidated revenue
arrangement. ARM also automates revenue forecasting, allocation, recognition, reclassification and
auditing through a rule-based event handling framework.

With Advanced Revenue Management, revenue is deferred across future periods according to the rules
configured. ARM supports fair values based on vendor-specific objective evidence (VSOE), best estimate
of selling price (ESP), third party evidence (TPE), and other fair value methods a company uses. These fair
values are used to determine the revenue allocation ratios for multi-element transactions.

Business Case
Reasons to use Advanced Revenue Management

• A solution that not only supports the forthcoming new accounting principle ASU 2014-09
(also called ASC 606) but also meets completive edge against point solutions for billing or
revenue recognition.
• Addresses common business requirements and enhancement requests, allow minimum
customization and providing more configuration capabilities to implement end to end
processes to deliver powerful rev rec solution to the customers.

Industry requirements met with the Advanced Revenue Management Module

• NetSuite now provides sophisticated functionalities that are on par with industry leading
revenue recognition solutions
• The unique Suite approach taken to design and implement revenue engine allows to deliver
an end-to-end integrated solution with other NetSuite ERP functional components such as
billing and PSA
• Provides multi-arrangement flexibility and allows to trigger revenue recognition by certain set
of criteria.
• New terminology that uses standard lingo and allows the users especially general population
to easily adopt the functionality
• Compliant with ASU 2014-09 (also called ASC 606) revenue standard

Quick Reference Guide 3

The Purpose of NetSuite Revenue Recognition

• Provides the capability to defer and recognize the revenue

• Capable of creating and management of revenue contracts
• Revenue activity analysis and forecasting

Additional Benefits

• Drive revenue workflow through rule-based event management framework that automates
the creation, update and posting of revenue records, eliminating error-prone manual work
items
• Allow user to directly execute complex revenue allocation, booking and reclassification
without additional scripting, complying with the new ASC 606 regulatory requirements
• Enable rapid deployment of new product offerings through automated change management
(upsell, downsell, contract modification).
• Provide an accountant-friendly user interface, improving visibility throughout order-to-
revenue
• Introduce fully detailed system notes and audit trail (including version history to key revenue
records), improving governance and compliance

Revenue Management Lifecycle

Stage Description

Construction The lifecycle of revenue recognition starts with the construction phase that
creates revenue elements from the source document or object and captures
revenue related information from the source transaction.
Rule based event handling framework is used to configure Arrangement and
Plan creation triggering events.
• As soon as business contract (sales order/any other source) is signed with
the customer, the business contract is automatically processed as revenue
arrangement in the system and converted into revenue elements.
o Creation of revenue arrangement/element will depend on the features
setup under accounting features and user triggered events.
• Catch the creation/update of revenue plan triggering events, create
forecasting and actual plan upon Creation, Fulfillment, Billing, Project
Progress.

Quick Reference Guide 4

Stage Description
o Creation of plans will depend on the feature setup under accounting
features and user triggering events.

Allocation Allocation identifies revenue element fair value and applies revenue
allocation rules across MEA.
When there are multi-element sales, the sales prices of the elements may not
be the same as their fair value. The sum of the fair value amounts also may
not equal the total sales price. Revenue allocation distributes the revenue
from a sale across its elements in proportion to their calculated fair value
amounts.

Adjustment New Revenue Management functionality provides the adjustment capabilities

if needed, that allows merging of arrangements, override information on
revenue elements, and re-applying revenue allocation rules.
Whenever there is a source change (change in qty, rate, amount etc.) or there
is an upsell or downsell to the same order, advanced revenue engine will
allow the ability to create linked orders. It provides the ability to merge
revenue arrangements into new arrangement to book the revenue across
multiple sales orders. There is also version history available for audit
purposes.

Exception • Revenue Plan can be placed on Hold and Resumed based on contingency
and condition.
Contingent
• Configuration and user errors/exceptions can be managed.
Management
o Exception management portlet on revenue work center.
o Exception management tab on individual revenue arrangement.

Billing All the billing activities are recorded based off of revenue element. Allows
Integration contract value reconciliation and deferred revenue reclassification.
Reclassification Steps:
1. Billing amount allocation (aka Carve in & Carve out)
2. FX adjustment
3. Unbilled receivable adjustment
4. Deferred revenue reclassification report

Reports Several reports are available to revenue and forecast analysis. The reports are
designed for revenue reconciliation purposes, forecast revenue, monitor and

Quick Reference Guide 5

Stage Description
audit reclassification activities associated with recognizing revenue separate
from billing.
• Deferred Revenue Rollforward Report
• Deferred Revenue Waterfall Report (Month-End)
o The Deferred Revenue Waterfall report reconciles the deferred
revenue account balance on the balance sheet and provides a
forecast of the expected revenue stream. This report is run as
part of month end process after revenue recognition and
deferred revenue reclassification journal entries are created.
• Revenue Recognition Forecast Summary and Detail Report.
o The Revenue Recognition Forecast Summary report shows the
amounts of deferred and recognized revenue for customer
obligations. You can use this report to view the totals for deferred
revenue and the periods when revenue recognition is planned.
• Deferred Revenue Reclassification Activity

Quick Reference Guide 6

Revenue Recognition Rules

Create a Revenue Recognition Rule

Revenue Recognition rules define how revenue recognition plans are generated after revenue
element/arrangement is created.

• The Revenue Manager role is created by the system when you enabled Advanced Revenue
Management Feature

Rule Type Details

Standard Revenue Recognition Rules • Standard revenue recognition rule is created by

default when ARM feature is enabled.
• Percent complete revenue recognition rule is
created when project feature is enabled.
• Both the default rules define the rule that begins
and end at same date, revenue is recognized
immediately.
• Revenue recognition journal entries need to be
created to complete the revenue recognition
when these standard rules are used.

Custom Revenue Recognition Rules System allows to create multiple rules to define the
terms to generate revenue recognition plans that
determine when and how the revenue from
associated items is recognized.

Steps
1) Navigate to Lists > Accounting > Revenue Recognition Rules > New (Administrator).
OR Revenue > Non-Transaction Revenue Recognition Records > View Revenue Recognition
Rules > New (Revenue Manager).
1) On Revenue Recognition Rule page, enter a Name for the revenue recognition rule.
2) Verify the Recognition Method.
3) Specify the number of periods to include in revenue recognition plans generated from this rule.
4) Define an offset value for the revenue recognition rule to delay the start of a revenue recognition
plan.

Quick Reference Guide 7

 • Period Offset – This moves the entire recognition period into the future by the number of
periods specified. The total number of periods remains the same, and the end date is
adjusted. For example, enter a 2 in this field to wait two periods before you begin
recognizing Revenue. This can be useful for services you sell that have a probationary or
trial period.
• Start Offset – This delays the beginning of revenue recognition, changes the number of
periods in the plan, and keeps the same plan end date. To use a start offset, specify the
number of periods to postpone the start of the revenue recognition plan. The number of
periods is reduced by the same number because the start is postponed but the end
remains the same.
5) Enter the Initial Amount. This is a percentage or fixed currency amount to be recognized in the
first recognition period.
6) Enter the specific Term in Months to include in revenue recognition plans generated from this
rule. If the start date is in the middle of the month, the end date is also mid-month. As a result, a
revenue recognition plan may span more periods than the month count. This field is available
only when the Rev Rec End Date Source is Rev Term in Months.
7) Select Amount Source.

Note: Revenue Recognition rule amount source options are event based and event is
defined on the item record under accounting subtab in “Create Revenue Plans on field”.

• Event-Percentage based on amount is used when “create revenue plan is on” Revenue
Arrangement Creation and Billing. Percentage of the revenue element line revenue amount
that the invoice amount represents in relationship to the discounted sales price. That is:
Invoice amount / discounted sales amount * revenue amount = amount in plan
• Event-Percent based on quantity is used when “create revenue plan” is on fulfillment.
Amount in plan is the percentage of the revenue element line quantity that is fulfilled
multiplied by the revenue amount.
• Event-Percent Complete is used when “create revenue plan” is on Project Progress. Amount
on plan is the percentage complete on the job record multiplied by the revenue amount.
8) Select the Rev Rec Start Date Source.

Note: This field value determines the source of initial revenue recognition start date on
the revenue recognition plan. This option is available only when “Project Management”
feature is enabled.

Quick Reference Guide 8

 • Arrangement Transaction Date: The date of the revenue arrangement and is default value.
• Event Date: The date of the event that triggers the creation of revenue recognition plan.
• Source Date: The date of the source transactions that triggers the revenue arrangement
• Revenue Element Start Date: The start date on the element record.
9) Select the Rev Rec End Date Source.

Note: Rev Rec End Date Source field on the revenue recognition rule determines the
source of the default end date on the plan.

• Term in Months: The end date is derived from the start date and value in the term in months
field.
• Term in Days: The end date is derived from the start date and value in the term in days field.
• Recognition Period: The end date is derived from the revenue recognition plan start date and
the value in the recognition period field. The end date is the last day of the period.
• Revenue Element End Date: The end of the revenue element record.
• Arrangement Transaction Date, Event Date and Source Date: These options are used to
recognize revenue immediately when the matching rev rec start date value are selected.
10) Select the End Date Change Impact.

Note: The End Date Change Impact field determines how revenue recognition plans are
updated when the end date changes.

• Update Remaining Periods Only: This is the default. The remaining unrecognized revenue is
divided by the total number of months or periods remaining.
• Update All Periods: The total revenue is divided by the total number of months or periods.
Adjustments to catch up or claw back revenue are made in the current period for previously
recognized revenue.
11) Click [Save].

Quick Reference Guide 9

Fair Value Pricing

Add a Fair Value Formula

Assign fair values to items and item revenue categories by setting up a fair value price list. To complete
the fair value price list, you must have fair value formulas.

Steps
1) Navigate to Setup > Accounting > Fair Value Formulas > New (Administrator).
2) Enter a Name for the formula.
3) Enter the Description.

4) Hover over Fair Value Formula to see the Set Formula icon .

5) Click the Set Formula icon . A pop-up window opens.

6) Select values from the Field and Function lists to add them to the Formula using the proper
syntax.

Tip: You can type directly in the Formula field.

7) Click [Set].
8) Click [Save].

Add a Fair Value Dimension

Fair value dimensions are fields that you add to the fair value price record.

Steps
1) Navigate to Setup > Accounting > Fair Value Price Lists (Administrator).
OR Navigate to Revenue > Setup > Fair Value Dimensions (Revenue Manager).
2) Select a dimension from the Field dropdown list.
3) Enter a Description.
4) Select additional fields and type descriptions as desired.

Note: You may use each field only one time. The maximum number of dimensions is 10.

5) Click [Save].

Quick Reference Guide 10

Add an Item Revenue Category
Item revenue category is a classification for items that have similar characteristics and revenue allocation
requirements. You can select an item revenue category when you are setting up a fair value price list
instead of selecting individual items.

Steps
1) Navigate to Setup > Accounting > Item Revenue Categories > New (Administrator).
2) Enter a Name for the category.
3) Enter a Description.
4) Select the Fair Value Formula that should be the default on fair value price records for items in
this category.
5) Select a Fair Value Range Checking Policy.

Note: The Fair Value Range Checking Policy dropdown list is visible only when the Fair
Value Range Checking accounting preference is enabled.

• Boundary – If the discounted sales amount is between the high and low values of the range, it
is used as the calculated fair value amount. If it is outside the range, either the high or low
value is used, whichever is closer to the discounted sales amount.
• Fair Value – If the discounted sales amount is outside the range, the calculated fair value is
used.
• High – If the discounted sales amount is outside the range, the high value is used.
• Low – If the discounted sales amount is outside the range, the low value is used.
6) Click [Save].

Create a Fair Value Price Record

Steps
1) Navigate to Setup > Accounting > Fair Value Price Lists > New (Administrator).
2) Select the Item Revenue Category. The Default Fair Value Formula populates based on your
selection.

Quick Reference Guide 11

3) Select the Currency if your company uses Multiple Currencies. The fair value for other currencies
is derived using the transaction exchange rate.
4) Enter the Base Fair Value for one unit of the item. This is used for range checking.
5) Enter either a Low Value or a Low Value Percent to set the bottom end of the fair value price
range. The field you don’t select populates based on your entry.
6) Enter either a High Value or a High Value Percent to set the upper end of the fair value price
range. The field you don’t select populates based on your entry.
7) In the Fair Value Dimension section, leave the Subsidiary (Main) as “Any”.
8) Click [Save].

Quick Reference Guide 12

Item Configuration

Set Up Item Record with Revenue Attributes

In Advanced Revenue Management module, revenue arrangements are created based on the
configurations specified in the accounting subtab on item records.

Configuring revenue recognition attributes on the Item records is critical to process the revenue
recognition workflow starting from creating revenue arrangements to revenue plans, journal entries to
recognize revenue.

The following Item types are supported by the revenue management module.

• Assembly including Serialized and Lot numbered

• Kit/Package
• Inventory including Serialized and Lot Numbered
• Non Inventory for Sale/Resale
• Other Charge for Sale/Resale
• Service for Sale/Resale
Non Inventory and Service for Sale items are set up in the system.

Steps
1) Navigate to Lists > Accounting > Items > New (Administrator).
2) Select Non-Inventory or Service Item for Sale.
3) Enter an Item Name/Number.
4) Navigate to the Accounting subtab.
5) Select the Income Account.
6) Confirm the default Deferred Revenue Account or select a new one. The Deferred Revenue
Account defaults based on your “Default Deferred Revenue Account” accounting preference.
7) Navigate to the Revenue Recognition/Amortization subtab.
8) Select the Revenue Recognition Rule to use by default for this item in a revenue arrangement.
9) Select the same rule as the Rev Rec Forecast Rule.
10) Select the Create Revenue Plans On. This defines the event that triggers creation of revenue
recognition plans:

Quick Reference Guide 13

 • Revenue Arrangement Creation – Revenue plans are created as soon as the revenue
arrangement has been created.
• Billing – Revenue plans are created after the sales order is billed. Plans are also generated
from stand-alone cash sales, invoices, credit memos, and cash refunds.
• Fulfillment – Revenue Plans are created after the sales order is fulfilled. This option is
available only when the Advanced Shipping feature is enabled.
• Project Progress -This option is available only when the Projects and Project Management
features are enabled.
11) Select the Hold Revenue Recognition checkbox to delay recognizing revenue from the sale of this
item.

Note: When this checkbox is selected, revenue recognition schedules or revenue plans are
created with the status On Hold.

12) Select the Item Revenue Category. This is a classification for items that have similar
characteristics and revenue allocation requirements. It is used in the fair value price list.
13) Select the Allocation Type to associate with this item on sales transactions.
• Normal - Revenue allocation follows EITF 08-01 rules when you use VSOE and the fair value
price list with advanced revenue management.
• Exclude - This item is excluded from revenue allocation. The item discounted sales amount is
the revenue amount.
14) Select the Revenue Allocation Group. The value for this field is used in GroupSum functions in
fair value formulas. The option selected here is the default, but you can change it on the revenue
element. The available options are configured during system set-up.
15) Select the Permit Discount choose from the following to determine how discounts are handled
for this item:
• As Allowed – Allows a portion of an applicable discount to be applied against this item when
revenue allocation is performed.
• Never - Prevents a discount from being applied against this item when revenue allocation is
performed.
16) Select the Default as Delivered checkbox to set this item to a delivered status automatically
when it is added to a transaction. Clear this box to leave the delivery status clear by default.

Quick Reference Guide 14

 Note: The fulfillment status of an item is separate from its delivery status. An item may be
marked Delivered although fulfillment has not yet occurred. The delivery status is one of
the factors that determines whether the residual method can be used.

17) Navigate to the Sales/Pricing subtab.

18) Select the Billing Schedule.
19) Click [Save].

Create Revenue Arrangement

A Revenue Arrangement and Plan is generated based on the Revenue Arrangement & Revenue Plan
Update Frequency setting under Setup > Accounting > Accounting Preferences – General section. If the
setting is manual, Revenue Arrangements and Plans need to be created manually.

Note: Plans may be created along with the arrangement if item has “Create Revenue Plan
On” field set to base on Revenue Arrangement Creation.

Revenue arrangement is initially created soon after the source document if the Revenue Arrangement
Update Frequency preference is set to Automatic in the Accounting preferences. The system will execute
the script and create revenue arrangement records every 3 hours.

Steps to Create Manual Revenue Arrangement

1) Navigate to Revenue > Revenue Arrangements > Update Revenue Arrangements.
2) Click [Update Revenue Arrangements] to generate revenue elements and revenue arrangement
for sales transactions created.
3) Click [Refresh] to update the results.

Note: Submission Status should be Complete. Message should be 0 Errors.

4) Navigate to the Status sublist.

5) On the Submission Status column, click Complete to review arrangements created by revenue
source records.
6) Click the Sales Order # in the Source column will take you to sales order screen.
7) Click the Related Records subtab.

Quick Reference Guide 15

 8) Click the Date link in date column right beside Revenue Arrangement type to open the
arrangement record.
9) Click [Back].

Steps to Review Automatic Revenue Arrangement

1) Perform a Global Search to locate the Sales Order.

Note: You can create revenue arrangements from the following transactions:
• Sales orders
• Invoices not created from sales orders
• Cash sales
• Cash refunds
• Return authorizations
• Credit memos

2) Navigate to the Related Records subtab.

3) Click on the Date link to the revenue arrangement.
4) On the Revenue Arrangement record, review the following:
• Transaction Total is the sum of the Discounted Sales Amount fields of the revenue elements.
• Total Carve In/Out is the total revenue that has been moved between elements from the
discounted sales amount to the revenue amount. It is always a non-negative number.
• Total Revenue Amount is the sum of the Revenue Amount fields of the revenue elements.

Note: Transaction Price and Revenue Amount should be the same amount.

5) Navigate to the Revenue Element subtab > Revenue Element sublist and review the values of the
following columns:
• Revenue Element includes a link to the Revenue Element record.
• Source is the link to the source record, in this case the sales order.
• Source Date
• Item includes the Item and a link to the Item record.
• Revenue Recognition Rule
• Revenue Recognition Plan Creation Event

Quick Reference Guide 16

 • Revenue Recognition Forecast Rule
• Revenue Account
• Foreign Currency Adjustment Account
• Contract Liability Account, if applicable.
6) Click [Back] to return to the Sales Order record.

Quick Reference Guide 17

Managing Revenue Arrangements
You can edit the fields on a revenue arrangement header either individually or in bulk. The same header
fields are available for edit using either method. The following procedure is for editing individual revenue
arrangements. You can edit revenue elements only by editing the individual revenue arrangement.

Note: Your role must include the Revenue Arrangement permission at the Edit level or
higher to edit arrangements.

Add a Date to a Revenue Arrangement

Steps
1) Navigate to Revenue > Revenue Arrangements > View Revenue Arrangements.
2) Click Edit next to the revenue arrangement.
3) Navigate to the Revenue Elements subtab.
4) Enter the Start Date when revenue recognition should begin for this revenue element.
5) Enter the End Date field and enter the date when revenue recognition should end for this
revenue element.
6) Click [Save].

Update Revenue Arrangement

Steps to Edit the Sales Order

1) Navigate to Customers > Sales > Enter Sales Orders > List.
2) Click Edit next to the sales order.
3) Navigate to the Items sublist.
4) Confirm or edit the revenue elements purchased.
5) Click [Save].

Steps to Review the Updated Revenue Arrangement

6) Navigate to the Related Records subtab.
7) Click the Date link of the revenue arrangement.
8) Navigate to the Revenue Elements subtab > Revenue Element sublist.

Quick Reference Guide 18

 9) Review the revenue elements.
10) Navigate to the Revenue Arrangement Message sublist.
11) View the Audit Trail of the automatic update and the description to see changes registered.
12) Click [Back].

Merge Revenue Arrangements

Manage revenue recognition across multiple source transactions within one revenue arrangement. You
can merge revenue arrangements when they share the same customer.

Steps
1) Navigate to Revenue > Revenue Arrangements > Merge Revenue Arrangements for Linked
Sources.
2) Enter a Customer.
3) Select the checkbox next to the revenue arrangements to merge.
4) Click [Preview] to view the arrangements before merging.
5) Click [Merge].
6) Click [Refresh] until Submission Status changes from In Progress to Complete.
7) Click the Complete link to view the merged arrangement information.
8) Click the New Revenue Arrangement number link to view the details.
9) Notice the Is Merged Arrangement checkbox is selected.
10) Navigate to the Revenue Arrangement Message sublist.

Tip: To view the new merged revenue arrangement, navigate to Revenue > Revenue
Arrangements > View Revenue Arrangements.

Quick Reference Guide 19

Revenue Recognition Plans

Update Revenue Plans

Two plans are created - Forecast and Actual.

Note: Create revenue plan is on the Revenue Arrangement Creation on the item record. If
create revenue plan is on billing, fulfillment, or project progress then only forecast plan
will be available until the event (billing, fulfillment, project update) takes place.

• Revenue Forecast and Actual Plans will be generated once arrangement record is created.
Navigate to Revenue Arrangement record and click Revenue Recognition Plan from each
revenue element

Steps
1) Navigate to Transactions > Financial > Revenue Arrangements (Administrator)
OR Navigate to Revenue > Revenue Arrangements > View Revenue Arrangements (Revenue
Manager)
2) Locate the revenue arrangement and click View.
3) Click the Revenue Elements subtab.
4) Locate Revenue Recognition Plan column and click to open the plan.
5) Click Edit on the popup screen.
6) Edit as needed:
• Revenue Recognition Rule
• Rev Rec Start/End date
• Hold Revenue Recognition

Note: Some fields might be disabled based on the status of the plan. For example: if
revenue recognition already in progress, you cannot change the start date.

7) Navigate to the Revenue Arrangement Message sublist.

8) Click [Submit].
9) Edit the fields within the arrangement record, as needed.
10) Click [Update Revenue Plan].

Quick Reference Guide 20

 11) Click [Refresh] to update the status until it displays Complete.
12) In the Message column, click the # Errors link to view error messages for each element.

View Revenue Plans

Steps
1) Perform a Global Search to locate the Revenue Arrangement.
2) Click [View Revenue Plan]. The Update Revenue Plans window opens.
3) Click [Edit].
4) Confirm or edit the following:
• Revenue Recognition Rule
• Revenue Recognition Start Date
• Revenue Recognition End Date
• Reforecast Method
• Catch Up Period
5) Click Revenue Plan Number link to view the actual revenue plan.
6) Review the following information:
• Revenue Plan Type
• Status
• Revenue Rec Start Date
• Revenue Rec End Date
• Creation Triggered By link
• Created From link
• Item link
• Revenue Recognition Rule
• Amount
• Total Recognized
• Remaining Deferred Balance

Quick Reference Guide 21

 • Hold Rev Rec checkbox
7) Click [Edit] to make any modifications to the actual revenue recognition plan.
8) Navigate to the Planned Revenue subtab > Planned Revenue sublist.
9) Review the lists of each planned period and the amount due to be recognized.
10) Navigate to the Planned Revenue subtab > Previous Revenue Plans sublist.
11) Review the previous versions of the revenue plan and the date of the change.
12) Click [Back].
13) Click [Cancel].

Quick Reference Guide 22

Revenue Allocation

Review the Allocation on a Multi-Element Arrangement

When you have multi-element sales, the sales prices of the elements may not be the same as their fair
value. The sum of the fair value amounts also may not equal the total sales price. Revenue allocation
distributes the revenue from a sale across its elements in proportion to their calculated fair value
amounts.

Steps
1) Perform a Global Search to locate the Revenue Arrangement record.
OR Navigate to Revenue > Revenue Arrangements > View Revenue Arrangements.
2) Locate the revenue arrangement and click View.
3) Navigate to the Revenue Elements subtab > Revenue Element sublist.
4) Review the following:
• Sales Amount
• Calculated Fair Value
• Allocation Amount
• Allocation Ratio
5) Navigate to the Revenue Arrangement Message sublist.
6) Review the lists of successful revenue allocations.
7) Click [Back].

Quick Reference Guide 23

Revenue Recognition for Projects

Add a Project to a Sales Order

For a project-based business, revenue can be recognized based on the percentage completed project
work using percent-complete revenue recognition plans. A percent complete plan is one that is derived
from percent complete revenue recognition rule.

Basic Project feature is enabled. You can locate project from global search by entering project name OR
navigate to sales order and click project link.

Using Percent-Complete Revenue Recognition for Projects:

• Revenue recognition rules that uses percent complete as amount source

• Service items with percent-complete revenue recognition rule and “project progress” as value
for “create revenue plans on”
• Project with start date and estimated/projected end date values.

Steps
1) Navigate to Customers > Sales > Approve Sales Orders.
2) Click on the Date link of the sales order.
3) Click [Edit].
4) Navigate to the Items subtab.
5) On the Project field, select New. A popup window opens.
a. Enter a Project Name
b. Confirm or edit the Project Status. Project Status defaults to In Progress.
c. Confirm the Start Date. Start Date defaults to today.
d. Confirm or edit the Project Manager. Project Manager defaults to you.
e. Select a Project Template, if applicable.
f. Navigate to the Financial section.
g. Select a Rev Rec Forecast Rule.
h. Select the Use Percent Complete Override for Forecasting checkbox, if applicable – this
ensures your forecast and actual plan uses the same percentage completion.
i. Navigate to the Percent Complete Override section.

Quick Reference Guide 24

 j. Select the Accounting Period.
k. Enter the Cumulative Percent Complete for each accounting period.
l. Click [Save].
6) Click [OK].
7) Click [Save].

Project Revenue Rules

Project revenue rules rely on charge rules to determine the amount of revenue to be distributed.
Revenue arrangements, elements and plans are created automatically after saving a project revenue
rule. Whenever events defined in a rule have been met, a Forecast Revenue Plan is then converted to an
Actual Revenue Plan.

The type of project revenue rule are based on how you want the system to recognize the revenue.

• Labor Based rule recognizes the revenue created from time tracked on the project.

• Fixed Amount revenue rule recognizes revenue based on a date, task, or milestone.

• Percent Complete revenue rule recognizes revenue at a rate equivalent to the project’s progress.

• As Charged revenue rule recognizes the revenue from actual project charges as they are created
rather than when they are billed.

Steps to Add a Labor Based Project Revenue Rule

1) Navigate to List > Relationships > Projects.
2) Click View next to the Project.
3) Navigate to the Rev Recognition - % Complete Override subtab > Project Revenue Rules sublist.
4) Click [New Labor Based Rule].
5) Enter a Name for the project revenue rule.
6) Select the Service Item for this rule.

Note: The service item determines the charges that are considered revenue to be
distributed.

7) Navigate to the Charge Rules subtab.

Quick Reference Guide 25

 8) Select a charge rule to determine how much revenue should be recognized.

Notes:
• If multiple service items are used for charges, create a labor-based project revenue
rule for each service item.
• You can add multiple charge rules of the same type to a revenue rule.
• Time-based charge rules can be added to multiple revenue rules that use different
service items

9) Click [Add].
10) Navigate to the Rates subtab.
11) Select the Rate Basis to determine the rate for revenue with this rule.
• Service Items takes the rate from the service items selected on the project’s time entries.
• Billing Classes takes the rate from the billing classes assigned to the project resources.
• Resources lets you set rates for each resource.
12) Select Rate Multiplier to multiply the calculated rate by a decimal number to determine the
recognized amount for the revenue created by this rule.
13) Select Time Rounding if you want time entries to be rounded up for the purposes of revenue
calculation.
14) Navigate to the Filters subtab.
15) Confirm or edit the Filter.

Note: Multiple filters on time entries can be added per rule.

16) Click [Save].

Steps to Add a Fixed Amount Project Revenue Rule

1) Navigate to List > Relationships > Projects.
2) Click View next to the Project.
3) Navigate to the Rev Recognition - % Complete Override subtab > Project Revenue Rules sublist.
4) Click [New Fixed Amount Rule].
5) Select the Service Item for this rule.
6) Navigate to the Charge Rules subtab.

Quick Reference Guide 26

7) Select a charge rule to determine how much revenue should be recognized.

Note: Multiple charge rules can be assigned to this rule.

8) Click [Add].
9) Navigate to the Revenue Plan sublist.
10) Select Recognize Based On date.
11) Select whether to Recognize the Amount or the Percent From Total Amount.
12) If Percent From Total is selected, navigate to the Percent From Total sublist and enter the Name
and Percent to Recognize.
13) Click [Save].

Quick Reference Guide 27

Month-end Processing
Month-end revenue processing includes creating revenue recognition journal entries to post revenue
from revenue plans and making month-end adjustments to deferred revenue. The month-end
adjustments to deferred revenue are referred to as reclassification.

Always run these processes in order: first revenue recognition and then deferred revenue
reclassification.

If you use revenue forecast plans, recalculate your forecast plans after you finish revenue recognition
and deferred revenue reclassification for the period.

Create Revenue Recognition Journal Entries

To recognize deferred revenue that is due to post, this step is needed. This step will create journal
entries from all revenue plans based on accounting periods.

Steps
1) Navigate to Revenue > Revenue Recognition Journal Entries > Schedule Revenue Recognition
Journal Entries > Run Now.
2) Select a Posting Period from the filter. The list is filtered to show only entries that are due to post
during the period you have chosen.
3) Select the Include Prior Periods checkbox to recognize the revenue on closed periods in this
current period.

Note: Use this to perform catch-up on revenue that was not recognized before a prior
period closed. Also mark Select Individual Schedules to select the select revenues up for
recognition.

4) Review the Journal Entry Date and adjust as needed.

5) Select a Subsidiary to limit the list of revenue recognition schedules or plans displayed for this
period.

Note: When scheduling revenue recognition journal entries, each subsidiary must have a
separate schedule.

6) You can further filter the list of revenue recognition plans using one or more of the following
fields:
• Transaction Type

Quick Reference Guide 28

 • Customer: Project
• Item Type
• Target Account
• Deferral Account
• Transaction Date From/To

Note: If you do not filter the list of plans, a journal entry is created for every schedule for
the period selected, even if there are hundreds of schedules, or more.

7) Select the Select Individual Schedules checkbox to select specific revenues for recognition.

Note: If you are performing catch-up on revenue that was not recognized before a prior
period closed, then ensure that both this, and the Include Prior Periods checkboxes are
marked.

8) Click [Estimate] view the total estimated submissions before creating the journal entries.
9) Click [Create Journal Entries].

Note: If the Start Date of a plan is in a closed period, the amount that would have been
recognized in that period is posted to the first open period.

10) Click [Refresh] to until Submission Status changes from In Progress to Complete.
11) Click the Complete link to view a summary of the journal entry and the status.
12) Click the Journal number link to view the journal entry details.

Create a Reclassification Journal Entry

This step should be run after each time you create revenue recognition journal entries. If you run these
processes out of the order for some reason, you can go back and run Create Revenue Recognition
Journal Entries and then rerun Create Deferred Revenue Reclassification Journal Entries. The
reclassification is cumulative.

Reclassification is to:

Quick Reference Guide 29

 Allocate the gross billing amount to individual Carve In: CR Deferred Revenue Account
revenue elements
Carve Out: DB Deferred Revenue Account

Allocate the gross billing amount to individual Carve In: CR Deferred Revenue Account
revenue elements
Carve Out: DB Deferred Revenue Account

Adjust Revenue for foreign currency variance, Gain: DB Deferred Revenue and CR Revenue
posting to item-specific accounts
Loss: DB Revenue and CR Deferred Revenue

Reclassify unbilled receivables Cumulative billing:

< cumulative revenue recognition: DB Unbilled Receivable
and CR Deferred Revenue
> cumulative revenue recognition: DB Deferred Revenue
and CR Unbilled Receivable

• As part of Period End process, you must create deferred revenue reclassification journal entries
each month to assure accurate results in subsequent periods.
• Revenue arrangements are included in the reclassification process only if they are approved and
the Compliant flag is checked.

Steps
1) Navigate to Revenue > Revenue Recognition Journal Entries > Schedule Reclassification Journal
Entries > Run Now.
2) Select a Posting Period from the filter. The list is filtered to show only entries that are due to post
during the period you have chosen.
3) Review the Journal Entry Date and adjust as needed.
4) Select a Subsidiary to limit the list of revenue recognition schedules or plans displayed for this
period.
5) Filter the list of revenue recognition plans by:
a. Transaction Type
a. Customer: Project
6) Click [Create Journal Entries].

Quick Reference Guide 30

 Note: If the Start Date of a plan is in a closed period, the amount that would have been
reclassified in that period is posted to the first open period.

7) Click [Refresh] to update the status.

8) Click link in the Message column to view any errors.
9) Click Complete in the Submission Status column to open the Processed Reclassification Journal
Entries page.

Reconcile Deferred Revenue

The Deferred Revenue Waterfall Summary report reconciles the deferred revenue account balance on
the balance sheet and provides a forecast of the expected revenue stream. Run this report after you
create revenue recognition and deferred revenue reclassification journal entries for the current period.

The Deferred Revenue Waterfall report divides deferred revenue into the following categories:

• Prior Unrecognized – Deferred revenue planned for recognition by the end of the current period
but not yet recognized. If you have not completed the month-end revenue recognition journal
entries for the current period, those amounts are included. When all amounts have been
recognized, this column is not displayed.
• Short-term deferred revenue – Deferred revenue planned for recognition in the short term. This
category is further divided into columns for each month. The number of months is determined by
the accounting preference number of Short-Term Revenue Periods. The default is 12.
• Long-term deferred revenue – Deferred revenue planned for recognition after the number of
months set for short-term deferred revenue. This is the Thereafter column of the report.
• Unplanned deferred revenue – Billed, unrecognized, and not yet in actual revenue plans. This
amount is usually equal to the deferred revenue balance minus the total unrecognized amount.
The total unrecognized amount is the prior unrecognized plus the short-term deferred revenue
and the long-term deferred revenue. The maximum unplanned deferred revenue is capped at the
total revenue amount for each element.

Steps
1) Navigate to Revenue > Revenue Reports > Deferred Revenue Waterfall.
2) Accept the default value in the As of filter. The default is the current period.

Quick Reference Guide 31

3) Select a value in the Subsidiary Context filter if you have a OneWorld account and access to
multiple subsidiaries.
4) Select a value in the Accounting Book filter if you are using Multi-Book Accounting and have
access to multiple accounting books.
5) Click [Refresh] to apply your filters.

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Key Reports

Review Standard Revenue Management Reports

The Revenue Management reports enable you to:

• Forecast revenue using revenue recognition schedule data.

• Recognize revenue separately from billing by monitoring and auditing revenue commitment
and reclassification activities.

Navigate to the Revenue Management reports and review the following available reports:

• Deferred Revenue by Customer or Item Report

• Revenue by Customer or Item Report
• Billing and Revenue Summary Report
• Deferred Revenue Rollforward Report
• Deferred Revenue Waterfall
• Revenue Recognition Forecast
• Deferred Revenue Reclassification Activity Report

Steps
1) Navigate to Reports > Revenue.
2) Select an available report from the list above.
3) Select any footer options.
4) If you modified any filter options in the footer, click [Refresh].
5) Click View Detail to review the detailed report.

Note: Only some reports are available in more detail.

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