Performing the revenue recognition

There are different ways to complete a revenue recognition. Akuiteo gives you another way to bill invoices and calculate a revenue. In your business, if the revenue calculation is directly linked to the billing process, an invoice validated in Akuiteo generates an entry in a product account (class 7).

Thanks to the Allocation of income to the period module, you can:

  • calculate the deferred revenue prorata on the class 7 entry, by applying a prorata between the closing date and the period specified on the invoice,
  • calculate the amount of invoices to be issued, that corresponds to the non-billed delivery note at the closing date.

The invoices to be issued and the deferred revenue values are calculated from the management objects (sales invoices and delivery notes). They generate accounting entries at each closing date and are linked to the projects and the structure (BU, entities). These values can be presented in a project financial report or a BU or company financial report.

If your revenue calculation is different from your billing process, or if you run several activities that imply different revenue calculations, you can set up different revenue recognition methods:

  • Prorata
  • Completion
  • 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.

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

  • If the billing is more 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). These values can be presented in a project financial report and a BU or company financial report. This computed data will also be stored in a history.

Possible scenarios depending on profiles

Specific profile:

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.

Software publisher:

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

Engineering company:

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