Advanced Revenue Management offers features to automate revenue recognition and deferral.
These features allow your company to recognize revenue independently from billing customers and receiving payments.
The Advanced Revenue Management (Essentials) feature automates revenue forecasting, recognition, reclassification, deferral, and auditing through a rule-based event handling framework.
With Advanced Revenue management (Essentials) you can defer revenue for recognition across future periods according to the rules you configure.
Revenue arrangements – non-posting transactions that record the details of customer performance obligations for purposes of revenue allocation and recognition. Advanced Revenue Management automatically creates revenue arrangements from predefined revenue sources, such as approved sales transactions. The arrangements from multiple revenue sources can be consolidated.
Revenue elements – 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 rules – Records that define patterns for revenue recognition. They include, for example, the recognition method, amount source, and start and end date sources.
Revenue recognition plans – 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.
The Advanced Revenue Management (Revenue Allocation) feature supports fair values based on the method of your choice. You can use standalone selling price (SSP), vendor-specific objective evidence (VSOE), best estimate of selling price (ESP), third party evidence (TPE), or some other method. These fair values are used to determine the revenue allocation ratios for multi-element transactions.
The fair value price list record is used in Advanced Revenue Management (Revenue Allocation):
Fair value price list – List of the records that define the fair value for items. Fair value price is used to allocate revenue in revenue arrangements.
To enable Advanced Revenue Management (Essentials):
Go to Setup > Company > Setup Tasks > Enable Features.
Click the Accounting subtab and check Advanced Revenue Management (Essentials).
Make sure that Accounting Periods is also checked.