Revenue recognition

DMF

070816 ACCOUNTING PERIODIC WORKS REVENUE RECOGNITION

070817 ACCOUNTING PERIODIC WORKS REVENUE DU CA : SAISIE

070818 ACCOUNTING PERIODIC WORKS REVENUE DU CA : VALIDATION

070820 ACCOUNTING PERIODIC WORKS COST DES CHARGES : HISTORISATION

070821 ACCOUNTING PERIODIC WORKS COST DES CHARGES : ECRITURE

The revenue recognition menu (Accounting > Periodic works > Revenue recognition) allows you to do the revenue recognition of the connection company when the revenue recognition is not in correlation with billing or when the company has various activities and requires to calculate multiple revenue recognition.

There are different ways to do a revenue recognition:

  • Prorata: The revenue is calculated in proportion of the time spent.
  • Completion: The revenue is calculated like the time-based billing. It takes into account time spent of employees of the company.
  • Actual progress: the progress percentage is calculated by comparing the actual with the expected costs (actual costs + remaining tasks).
  • Theoretical progress: the progress percentage is calculated by comparing the timesheets and the number of days sold matching the quantities of the order lines.

Note

Various methods can be set up for the same company.

Reference

For more information about the various revenue recognition methods, see Description of Revenue Recognition methods.

When the revenue is calculated, it is separated from the sales billing process:

  • If the billing is greater than the revenue, a deferred revenue is generated.
  • If the billing is less than the revenue, an invoice to be issued is generated.

Once these calculations are validated, deferred revenue and invoices to be issued entries are generated per project (or per phase).

The revenue can be calculated using a dedicated project logging process and in a specific report if:

  • you do not want to generate accounting entries,
  • you want the calculation to depend on business data as well as on standard management objects (for example: project custom data) and the revenue calculation methods that are available cannot be used.

Example

There are two examples of revenue calculation according to the company's profile:

Software publisher profile:

  • Maintenance: Prorata
  • Rebilling charges: Completion
  • Services with delivery notes: Completion
  • Fixed price projects: Actual progress
  • Sold time-based billing: Theoretical progress

Engineering company profile:

  • Fixed price projects: Actual progress with updated sales forecast
  • Sold time-based billing: Theoretical progress
  • Occasional service: Completion

Various setups must be done beforehand:

  • Setting up the access to the Revenue recognition (see Company).

Important

When the Revenue recognition menu is available, the Allocation of income to the period menu is hidden.

  • Setting up the accounting position (see Accounting position).
  • Setting up revenue recognition rule to apply (see Revenue recognition).
  • All invoices at closing date must be validated in order to create entries after the recognition.
  • Setting up sub-families of sold items (see Sold products).

    It is possible to link a revenue rule from the set up screen of sub-families of sold items (Tools > Setup > General setup > Sales > Sold item sub-families). When the Revenue recognition field is modified in the sold item sub-family setup, Akuiteo suggests you to update the revenue recognition rule of all sold items linked to this sub-family.

  • Sold items must be set up (see Sold products).

    The revenue recognition module only takes into account the sold items with the same rule specified in its set up. Therefore, you must run the revenue recognition process as often as there are revenue recognition types configured.

1 Go to Accounting > Periodic works > Revenue recognition.
2 Under the Period to analyze section, select the Revenue recognition method to apply and the characteristics of the period on which the recognition must be done.
3 Under the Filters section, select if needed the criteria to apply. The Used criteria tab displays a recap of all used criteria for the search.
4 Start the search of the lines to be recognized:
  • by cliking on from the action bar, or
  • by going to Edit > Revenue recognition.
1 Go to Accounting > Periodic works > Revenue recognition.
2 Start the search of the lines to be recognized.
3 From the search results displayed, select the lines to validate.
4 Click on at the top right of the search results.

The revenue recognition is done. Deferred revenue and invoices to be issued entries are generated and validated. They are available from Accounting > Entries > Entries. Data displayed in the table are logged and can be viewed later .

Prerequisite: The Revenue recognition method must be of type Actual progress or Theoretical progress.

1 Go to Accounting > Periodic works > Revenue recognition.
2 Start the search of the lines to be recognized.
3 From the search results displayed, right click from a selection of lines and select Input forced progress.
4 In the window displayed, specify the Progress percentage to apply to the lines and click on Validate.

The progress percentage specified is displayed in the Forced progress column and the value of the Revenue recognized column is recalculated as follows: Budget x Forced progress percentage.

Prerequisite: the Revenue recognition method must be Prorata.

1 Go to Accounting > Periodic works > Revenue recognition.
2 Start the search of the lines to be recognized.
3 From the search results displayed, right click from a selection of lines and select Enter the selected accrual invoices and prepaid income.
4 In the window displayed, specify the Selected SIA and Selected prepaid income fields and click on Validate.

The Chosen sales invoice accruals and Chosen deferred income of the selected lines are updated.