Advanced Revenue Management

The NetSuite order-to-revenue workflow begins with the sales order or invoice. The workflow specifically includes these transactions: sales order, invoice, cash sale, return authorization, credit memo, and cash refund. If you have been using classic revenue recognition features, and order-to-revenue workflows that began before you enabled Advanced Revenue Management to continue to use classic revenue recognition. 

Any new order-to-revenue workflows created after the feature is enabled will use Advanced Revenue Management. New order-to-revenue workflows include all new sales orders, even those generated from quotes that were created before Advanced Revenue Management was enabled. 

To enable Advanced Revenue Management: 

1. Go to Setup > Company > Setup Tasks > Enable Features. 

2. Click the Accounting subtab and check Advanced Revenue Management. 

3. Make sure that Accounting Periods are also checked. 

4. Click Save. 

Item Record Setup:  

When you use Advanced Revenue Management, by default, revenue arrangements are created based on the configuration you specify on the item record. If you use the Rule-Based Recognition Treatment feature, other values may supersede some of your item configuration values under specified conditions. 

Users can configure Advanced Revenue Management for the following item types: 

• Assembly including serialized and lot numbered 
• Kit/package 
• Inventory including serialized and lot numbered 

• Non-Inventory for sale or resale 
• Other charges for sale or resale 
• Service for sale or resale 

Any item configuration changes you make do not affect revenue elements that were created before the change. 

Two subtabs on the item record include fields used to configure Advanced Revenue Management. 

5. Accounting Subtab: Define the Deferred Revenue account, Income Account, and Intercompany deferred revenue account. 

6. Revenue Recognition/Amortization Subtab: Define the revenue recognition rule & revenue recognition forecast rule. 

Revenue Recognition Rules: 

Revenue recognition rules define how revenue recognition plans are generated after a revenue element is created. 

Users can create multiple rules to define the terms under which revenue is deferred. These revenue recognition rules are used to generate revenue recognition plans that determine when and how revenue from associated items should be recognized. 

For each rule, User can: 

• Select from standard revenue recognition methods 
• Set the time period over which revenue is recognized 
• Define an offset to delay the start of recognition 
• Set up an initial amount to be recognized 

• Select the source of the revenue recognition plan amount 
• Select the trigger for plan start and end dates 
• Determine how the plan is modified if the end date changes 

Revenue recognition rules cannot be edited after they have been used to generate a revenue recognition plan. The exception is that the rule name can be changed. Users cannot delete revenue recognition rules after they have been used. 

To define a revenue recognition rule: 

7. Go to Revenue > Non-Transaction Revenue Recognition Records > View Revenue Recognition Rules > New to open the Revenue Recognition Rule page. 

8. In the Name field, enter a name for the rule. Revenue recognition rules must have unique names.  
   To help identify rules when they appear in list fields, you can include short forms of key terms of the rule in the name. 

9. In the Recognition Method field, select a method to specify the terms for posting revenue. 
   For descriptions of the available methods. 
   If you select Custom, you must manually specify period offsets and amount percentages in the columns in the lower portion of the page. The columns are available only when you select Custom as the method.  
   Period Offset – Specify the number of periods to postpone the start of the recognition plan for this line. The first period to recognize has an offset of zero. 
   Amount Percentage – Enter the percentage of revenue amount to recognize. 
   Click Add. 
   Repeat the steps above until the total in the Amount Percentage column equals 100. 

10. Select an Amount Source to determine how the amount for the revenue recognition plan is derived. 

11. Select a Rev Rec Start Date Source to determine the source of the initial start date on the revenue recognition plan. The actual start date can be changed in the plan if revenue has not yet been recognized. 

12. Select a Rev Rec End Date Source to determine the source of the default end date on the revenue recognition plan. The actual end date can be changed in the plan. 
    When you select Rev Term in Months, you must enter a number in the Term in Months field. 
    When you select Rev Term in Days, you must enter a number in the Term in Days field. 
    When you select Recognition Period, you must enter a number in the Recognition Period field. 

13. Optionally, edit the End Date Change Impact field, and enter values in the Period Offset or Start Offset fields and the Initial Amount field. 

14. Optionally, check the Inactive box. You can save the rule, but it will not appear as an option in lists. 

15. Select a Reforecast Method to use for forecast plans. The accounting preference Default Reforecast Method determines the default for this field. 
    If you select Manual as the Reforecast Method, enter a positive integer in the Recalculation Adjustment Period Offset field. This field is read-only when you select any other method. 

16. Click Save. 

NetSuite Revenue Arrangements:  

This is responsible for handling the specific attributes and details corresponding to customer performance. The module also deals with the responsibilities and obligations for recognizing and allocating revenue. The best thing about the module is that it automates the process of allocating and arranging revenue streams. 

Revenue Elements:  

This module is responsible for storing all the revenue recognition data along with information on revenue sources and streams. Records that correspond to individual lines in a source. Each revenue element represents a performance obligation. Revenue elements are attached as lines on a revenue arrangement. 

Revenue Recognition Plans:  

This module of NetSuite ARM deals with the preferred forecasting methods and the way revenue recognition information is stored through the database entries.  

Records that indicate the posting periods in which revenue should be recognized and the amount to be recognized in each period. Revenue plans are derived from revenue recognition rules. Each revenue element may have a forecast plan and one or more actual plans. The actual revenue plans control the posting of revenue. You must generate revenue recognition journal entries to post the revenue to the general ledger. 

Revenue Recognition Journal Entries: 

Although revenue recognition schedules provide the information required to recognize revenue, you must generate the appropriate journal entries to post revenue to the general ledger 

To generate revenue recognition journal entries: 

1. Go to Transactions > Financial > Create Revenue Recognition Journal Entries. 

2. You can also access the Create Revenue Recognition Journal Entries page directly from your dashboard by setting up the Revenue Recognition Entries Pending reminder. See Setting Up a Reminder for Revenue Recognition Journal Entries. 

3. Select a posting period. 

Note 

You cannot post revenue recognition journal entries in closed periods or in periods that are locked for A/R as part of the Period Close Checklist. 

1. In the Journal Entry Date field, set the transaction date of revenue recognition journal entry you are creating. 

2. You can set the default date that shows in this field by setting a preference at Setup > Accounting > Preferences > Set Up Accounting. Select a date in the Default Revenue Recognition Journal Date to field. 

3. If your role has permission to enter journal entries that are approved, check the Approve Journal box to approve the journal entry when you save it. Clear this box to submit this journal entry for approval after it is entered. For another way to approve journal entries, see Journal Entry Approval Overview. 

4. If you use NetSuite One World, select the Subsidiary to associate with this journal entry. 

5. When a journal entry is associated with a subsidiary, the journal posts to that subsidiary and the schedule is restricted to be viewed only by entities associated with the subsidiary. 

6. Use the filters at the top of the page to limit the list of source transactions scheduled to recognize revenue for this period. 

7. For information about the filter fields available, see Filtering the Revenue Recognition Source Transaction List. 

8. The page shows a list of revenue recognition journal entries due to post, subject to the filters you select. The following information is shown on each line: 

• Source Transaction – A link to the related transaction. 
• Customer – A link to the related customer. 

• Project – A link to the related project. 
• Type – Shows if the schedule is Standard or Variable. 
• % Recog. – The total percentage of a variable schedule recognized prior to this journal entry. 
• % Complete – The total percentage completed of a project that is related to a variable schedule. 
• The difference between the % Recognized and the % Complete is the Amount that is recognized in the current period on this journal entry. 

• Schedule Name – A link to the related revenue recognition schedule. 
• Template Name – A link to the related revenue recognition template. 
• Transaction Type – The type of originating transaction. 
• Amount – The amount to be recognized on the journal entry for this line. 

9. Check or clear the Select Individual Schedules box: 

• When you check the box, journal entries are created only for schedules you select. After you filter the list to show schedules, check the box in the Select column next to each schedule you want to generate journal entries. 
• If there are multiple pages of transactions shown when selecting schedules, the following is true: 
• If you click Mark All or Unmark All, only boxes on the current page are affected. 
• You must click Create Journal Entries to create an entry for each page of schedules. 
• When you clear the box, the list of schedules displayed is limited to a sample of 100 schedules, and an Estimate button appears at the top of the page. 

• Click Estimate to count the number of schedules and calculate the amount for all of the schedules included with your current filter settings. 
• Adjust the filters as needed and click Estimate again. 

10. Click Create Journal Entries. 

11. On the Process Status page, use the link in the Submission Status column to view the journal entry for the submission and verify that it is correct.