Revenue recognition combined with project billed via dip

Hi all,
We are using following flow for the follow-up of some Time and material projects:
- Creation of a sales order with a material creating a project in the background
- definition of the pricing of the different resources working on the project in VK11 (material master which will be used in the dip profile)
- use of activity type and CATS to post time on the project
- use of the DP90 to bill the customer on a regular basis.
When running this flow, we are fine as long as the posting of time via cats and the billing are done in the same period (monthly billing based on time-sheet): in this case, revenues are posted via the billing in the same period than the one during which costs occurred and our CFO is happy.
But when we have to delay for any reason in the billling process (billing is not done in the same period) we would like to recognize the revenues in the same period than the one during which the costs have occurred.
We have found one result analysis method which repost on a stock account the costs occurred during the period when running the project settlement but our CFO would like to see the real revenues on a revenue account:
at settlement of the project at month end closing, following postings are requested:
- credit the turnover account; debit a balance sheet account (invoice to be issued)
at the posting of the customer bill:
- credit the balance sheet account (invoice to be issued) and debit the customer account
Did some of you already face the same problem ?
If yes, could you share with me how you solved it
Thanks a lot for your help and best regards
Bernard Dauby on Behalf of François; [email protected] (+32 478 47 20 52)

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What is the Revenue recognition process ?

Hello Experts,
Could you explain the concept of "Revenue recognition" and what is the use of this process.
Thanks and Regards

Hi
Revenue recognition controls the posting period in which revenues are entered and their value.
Revenue recognition means that revenues can be posted in FI independently from the billing document (which normally posts to revenue accounts). This means that revenues can be posted before, during or after billing or a value that has already been billed can be distributed between various periods.
Revenues can be posted periodically or on the basis of specific events:
Standard revenue recognition means that the billing document posts directly to a revenue account. This posting is made without involving the Accrual Engine, i.e. without a revenue recognition process.
Periodic (time-related) revenue recognition means that the revenue from a sale is distributed and posted equally across the entire contract validity period. Billing posts to an accruals account here and revenues are first transfer posted to the revenue accounts in a second step.
Service-related revenue recognition means that the revenue is recognized as the result of an event such as a confirmation or a delivery. Billing also posts to an accruals account here and revenues are first transfer posted to the revenue accounts in a second step.
to know the integration with ECC click on this
http://help.sap.com/saphelp_crm60/helpdata/en/45/f004d98b8f3481e10000000a1553f6/frameset.htm
Reward if helps
Regards
Manohar

Data Migration of Contracts with periodic billing and revenue recognition

Hello Experts,
I am trying to develop a legacy data migration plan for Contracts with periodic billing plan and revenue recognition.
Example of the scenario is given below:
Customer signed a contract for one year starting 01/01/2009.
Customer is billed quartely, billed in advance.
SAP going live on 04/01/2009
Customer is billed for 3 months and also for initial set up fees.
Revenue recognition is done monthly.
We have to migrate this contract to SAP.
Billing document posting may be necessay as it affects revenue recognition which spans across the total contract period.
Any ideas how to do this?
Thanks A Lot
Anil
Edited by: Anil Jose on Sep 17, 2008 9:38 PM

Hi Anil
How did you manage this? We also had the same problem in one of our contracts and what we did was that we copied the contracts from the legacy with the full value. That is suppose SAP went live on 1st April, 2009 and the contract was created on 1st January 2009 for a value of suppose 100 USD, with the first billing being done on 1st Jan for 33.33 USD for 4 months. We first created the contract with a validity from 1st Jan 2009 in the new system. We billed it with a billing type that we created that did not actually create new accounting entries as the accounting entries had already been created in the legacy system. In the new system then we recognised the revenue till the go live, so that the actual value remaining of the contract reduced. Then we started the billing plan of the contract from 1st of April 2009 for the remaining amount. So next invoice was created on 1st april for 33.33 USD. Can you share your solution.
Regards
Indranill

Revenue Recognition Process in Oracle Projects

I am new to Oracle Projects and needs to understand the Revenue Recognition process.
User has created one Contract under which he has Intercompany Billing, Costing and Elimination Projects. He booked the cost under the Costing project and then ran a custom elimination program to eliminate the intercompany cost. Now he is going to the billing project and running the 'Generate Draft Revenue' program however nothing is getting generated. He wants to know why revenue is not getting recoginised.
Is it the correct way of recognizing the revenue. The Distribution rule being used is Event/Event however no event has got created in the billing project to recognize the revenue.
Please suggest.

Hi ,
The subcontracting process can be exceuted in the following way..
The modules involved will be PA, PO, AP..
This can be handle with the P2P cycle..
Raise a servie PO with the project information in the PO distributions for the service that needs to be subcotracted..
specify the matchig option in the PO Shipments
Enter a receipt (Optional)
Enter a AP invoice and match it with PO or receipt as per the requirement and then run PRC: Interface supplier costs..
this will post the expenditure in the Projects.
In addition to the above i fu have complex PO (with helding some portion of the order amount as retention, advace payment to be provded)
this can be handled through creating the PO through selfsevice PO which accomodates this functionality.l
Thanks
Vijay.

Sales Order Progress Billing and Revenue Recognition

I need some suggestions to take care of a progress billing and revenue recognition requirement. Billing and revenue recognition need to happen in parallel but on totally different schedules. Here's a sample scenario that I'd like to set up OM and AR without customization to do the following:
Sales Order $100000
Billing
Jan 06 $25000
Feb 06 $60000
Mar 06 $15000
Revenue Recognition
Jan 06 $20000
Feb 06 $30000
Mar 06 $40000
Apr 06 $10000

Hi
There is no standard functionality that support integration of Order Management and Oracle Projects Billing.
In Projects you can generate revenue based on progress. There is a form in Projects, where user may enter once a period the percentage of progress for the project.
You may want to setup the project with revenue distribution rule as event, and assign a progress based billing extension to the project.
You should develop your own code to generate projects invoices for items delivered from OM. A custom code could be loading events using API, an event for each shipment transaction in OM. Note, if you are going to generate invoices from projects, you should avoid interfacing the transactions from OM to AR, to prevent double accounting.
Dina

Multiple Revenue Recognition Methods on a Project(Task Level)

We have projects where certain portion of revenue is recognized based on events(ex: equipment shipment) and certain portion is recognized as cost is incurred(Percentage of Completion).
In Oracle Projects we can have only one Distribution rule for Revenue per project and doesn't allow to have different Revenue distribution rule at the task level.
Business case: Project is for Equipment and Additional Service is purchased, separate tasks are created for Equipment(Task#10) and Service(Task#20).
Billing is based on Events.
Equipment(task#10) revenue is recognized based on order line shipment(event created),
revenue for Service(task#20) is recognized as Cost is incurred to perform the Service, based on POC calculation.
Following is what we tried as Proof Of Concept:
Funding is at Task Level (set at Project Type), Baseline Funding without Budget is enabled(i.e Revenue budgets are created when funding is baselined)
Billing extension Cost-to-Cost Revenue is assigned on project type, Forecast Cost Budget is used in calculations
Set the distribution rule on project to COST/EVENT
On tasks for Equipment(Task 10), we entered $0 Forecast cost budget
On tasks for Service(Task 20) we entered a $$ Amount(non zero) for Forecast Cost budgets.
Task 10( Equipment - Event based revenue), $0 Cost budget
Create Costs on task 10, Distribute, Account, run the processes to generate revenue
Create a manual revenue event for equipment shipment
Revenue events from Billing extension are not generated, since there is no cost budget, Revenue is generated only for the manual event we created - This works as expected.
Task 20(Service - POC based revenue), Cost budget is $10000 (for ex:)
Create Costs on task 20, Distribute, Account, run the processes to generate revenue
Automatic Revenue events from Billing extension(Cost-to-Cost Revenue) are generated, since there is cost budget, Revenue is generated based on POC calculation.
Questions:
With the assumption that we will not maintain forecast cost budgets for equipment tasks and use the standard Cost-to-Cost Revenue extension.
We would like to know what is the impact of the above solution option on standard Project Billing functionality and any others.
Any other workarounds to achieve what we are looking for(i.e multiple revenue recognition methods on a project)
How others achieved similar business requirement with Oracle Projects(At present we are creating a 2nd project for Service component) and it has it's cons(consolidated billing etc, since we will be funding 2 projects)
Harish

Dear Harish,
I am not sure i have a perfect solution but you can try this.
Set Billing extension to Cost/Event (Percent complete revenue) this will be used for all the scenarios where revenue should be recognised by the system like Ex: Task20
Use Pre-Approved batches for rest of transactions where the cost directly effects the Project.
Regards
Shaan

Pricing procedure not to bill customer but revenue recognition

I'm looking for guidance on how to setup a pricing procedure conditions. First let me explain the situation. What happens is the customer buys say 2000 software licenses on a sales order. The customer is billed and the customer account is debited and a deferred account is credited. Now the customer activates one of the licenses. The pricing from the sales order is copied to a contract. This contract has a start and end date for the license. Now that license can start to be recognized based on the period of the line item contract dates.. The issue we have is that normally for deferred revenue billing takes places. Problem is customer was already billing on the sales order. Somehow the pricing procure has to credit the deferred account that was posted on the sales order and then credit the revenue recognition account that can be used by transaction VF44.
So on the invoice associated with the sales order Invoice from sales order
Dr Customer $1000
Cr 2370 $1000
The account 2370 is the deferred account. This part is fine.
Now we activate 1 of the licenses.
So the pricing procedure has to do the following with no billing to the custo0mer account Invoice from contract
Dr 2370 $120
Cr 2371 $120
This is the problem part. crediting the deferred account 2370 and then posting into the revenue recognition account 2371
Rev Rec – VF44 for Period1
Dr 2371 $10 Cr 4340 $10 Any ideas would be appreciated

Hi
In SD billing documents customer is always debited or credited based on nature of transaction. For posting in two different G/Ls instead of customer account there is only one possible way which I know. In free goods pricing system can post debit and credit entries to different G/Ls and these G/Ls are controlled through account keys which you assign to condition types in pricing procedure.
Do you have any Idea of free goods pricing and its posting? Explore this and give it a try. I am not sure about this because I didn't test this. You can test and see if it helps.
In this for contract item category you have to use free goods pricing which you set in item category settings in VOV7.
Thank$

Config of billing type G2 for Revenue Recognition

Hello Experts.
I have a situation where I need to configure billing of credits for revenue recognition.
For normal builling we have copied doc type SO to ZBCS and added ZTAD item category (copied from TAD) for the RR.
To do this for credits I copied doctype CR to ZBCR and assigned ZTAD item category to it.
When billing the ZBCR not I get the message "Item category ZBCR ZTAD cannot be invoiced with billing type G2".
How can G2 be configured to allow this?
This is G2's current setup.
Billing Type G 2 C red tM e m o Created by
Number systems
No.range int.assgt. 19 Item no.increment 0
General control
SD document categ. O C re dit m emo Posting Block
Transaction group 7 B il lin g doc um ent s Statistics
Billing category
Document type DG C us tom er cr ed it me mo
Negative posting N o neg at ive p ost in g
Branch/Head office C us tom er =Pa ye r/B ra nch =s old -t o p ar ty
Credit memo w/ValDat N o
Invoice list type
Rebate settlement Rel.for rebate
AcctDetermProc. KOF I0 0 A cco unt De e rm n ato n
Doc. pric. procedure
Acc. det. rec. acc.
Acc. det. cash. set.
Acc. det. pay. cards
Output/partners/texts
Output determ.proc. Z10 00 0 B il lin g Out pu t Application V 3
Item output proc.
Output Type
Header partners FK B iln g D ocu m en t
Item partners FP B il lin g Ite m
TextDetermProcedure 03 Invo c e hea de r
Text determ.proc.itm
Delivery text

Hi,
You may be maually given the PR00 in ZBCR. But in your copy control (VTFA) --> item category ZTAD --> pricing type, you may be maintained B (Carry out new pricing).
If you maintain B, you have to change it to "D ".
When you maintain B, the system will search the Pricing again in Credit memo. All manual prices will be lost.
Thanks
M. Lakshmi Narasimhan

Revenue Recognition in Project System

Hello All,
At my current client, they are using the Project System (i.e. WBS) only for Cost and Revenue collection. POC,RA,Milestone billing,Network, Activities are out of scope. Keeping the above thing in mind, I need to know how I do the Revenue recognition thru WBS.
Mu understanding is that If I assign a WBS element on a Sales Order line item, as an account assignment it should collect the Revenue. The only requiremnt should be that WBS should be a billing element and Cost/Revenue profile should carry SD relevant settings. Once the billing is done and invoicing is done, the Revenue should appear against the WBS on running the report S_ALR_87013563/64/65/66.
Please let me know if this will work or do I need to do some more configuration from PS perspective.
Thanks
Sarang

Hi Sarang,
1. Mark WBS as billing element.
2. Assign the sales order line item to the WBS in point 1 or any WBS below that in the hierarchy.
3. Create a billing plan for the sales order line item.
4. The billing plan amount would appear as planned revenue against the WBS element (provided no credit hold useVKM3 to release).
5. Once the line item has been billed ie. Billing document has been created using VF01 or VF04, the Actual revenue would appear against the WBS element.
In terms of Config:
Creat a planning profile that allows Automatic Revenue planning form Sales Order (tcode: OPSB)
Ensure that the planning profile is attached to your project profile (Controlling tab) (tcode:OPSA).
Please let me know if this helps.
jibat
Edited by: Jibat Sankar De Sarkar on Jan 21, 2009 2:49 PM

UNBILLED RECIEVABLE ACCOUNT- SERVICE CONTRACT WITH REVENUE RECOGNITION

Hi SAP Gurus,
I want to draw your kind attention towards my problem:
I have created service contract with one year contract and created an invoice for the whole year in advance.
Now in-between i cancelled a contract (after three months) and want to recognised a revenue for the contract period , so i'm creating a revenue recognition for the three months one by one using transaction code-VF44,
first month revenue recogniton is working fine as first month amount is going from deffered account to revenue account
But for second month instead of deffered account ,system is using unbilled recievable account ,which is wrong .
Can anybody tell me why the system is picking unbilled receivable account instead of deffered account in case of second month revenue recogniton.
This may help us:
"When i was cancelling a contract ,at that time i was entering a billing plan end date in billing plan tab at an item level.
and just after entering end date ,system was creating two lines instead of one in billing plan tab and i think because of that extra line system is picking unbilled receivables in second revenue recognition."
Thanks in advance
Ujjawal
Edited by: Ujjawal Singh Karki on Dec 29, 2010 12:05 PM

Hi,
Thank you for your reply.
I am doing a contract billing for overall period that is for 12 months (contract is of 12 months).
Just after 3 months i have realized that somehow we have to cancel the contract and we canceled that in 3rd month.
I had created the created a contract with periodic billing plan and for canceling that contract i'm putting contract end date in BILLING PLAN TAB as 31/03/2011 (Let say contract is from 01/01/2011 to 31/12/2011).
Can you/anybody please tell me whether is this the correct way of canceling the contract with periodic billing plan?
As per your analysis:
"It seems you have done the billing document for one period and you are doing the RR document for multiple periods and hence the revenue is going to unbilled receivable account for the period for which billing document has not been done"
As i have billed the customer for 12 months but contract was only for 3 months so i'll create RR for only 3 months and for rest of the period (i.e. 9 months) i'll create credit memo and send it to customer.
"Please use a billing type where you will specify only start date and end date of the contract and not the billing plan in contract"
How can we use billing type for contract start and end date .
I think as soon as i'm changing the dates in billing plan tab system is proposing another line item with different billing dates and that is not getting covered under deferred account that is still unbilled amount .
Waiting for your valuable inputs.
In case of any clarification kindly revert to me.
Thanks,
Ujjawal
Edited by: Ujjawal Singh Karki on Jan 20, 2011 11:10 AM

Revenue Recognition with RA on Service Contracts

We have configured SD Revenue Recognition function (ECC 5.0). We have warranty maintenance contracts running. On this basis we have the following scenario and issue.
The warranty maintenance contracts are created without a billing plan (Reqmt. type SE so that we can settle costs later). The value of which is transferred to Deferred Revenue Account and is recognised at the end of the contract period (As it bears the retention money with the customer). Until this step things are working fine. We use VF44 to recognise revenues.
However, there are costs incurred (both material & labour) in relation to such contracts. To track this, we create a Service Order s against the Service Contract for each month. Later on fulfillment, the orders are settled to the Service Contract. This is reflecting in the Service Order. But the finance team wants to recognise the revenues to the extent of costs incurred. I'm not sure how we can do this. The following is an example scenario.
Contract Value : $1000
Contract period : 1 yr (1.1.2010 to 31.12.2010)
Contract billed at the start of the year on 1.1.2010 so the amount is moved to Revenue Provision (Deferred Revenue)
At the end of the year $1000 lying in Deferred Revenue will be moved to Revenue Account through Revenue Recognition (VF44)
Now, costs incurred as follows which are booked in separate service orders against the contract and on completion, settled to the contract. There is no definite schedule for these costs.
Apr 2010 : $100
Jun 2010 : $200
Sep 2010 : $500
Now, the finance team wants to recognise revenue to this extent during the relevant periods. For eg.
Apr 2010 :
Deferred Revenue A/c $100
To Revenue A/c $100
Jun 2010 :
Deferred Revenue A/c $200
To Revenue A/c $200
Sep 2010 :
Deferred Revenue A/c $500
To Revenue A/c $500
And at the end of Dec 2010 :
Deferred Revenue A/c $200
To Revenue A/c $200
(for the remaining amount)
Can anyone guide me how this can be achieved? Can I do it by running RA on Service Contracts?
Thanks in advance.
Ravi.

One option:
This is how we do it in my company. This scenario is of committed services where biling is based on bill plan but revenue is as incurred. So you will bill 100% in advance to have a deferred position but evey month you calculate the service delivered/incurred and recognize the revenue reference to that service. You have to deliver the equivalent hours (To match the amount you want to recognize) and the VF44 based on delivery document. You might have to adjust your ETC based on the amount you want to recognize every month and the total qyantity to deliver.
In summary, basically you use following steps:
1. Sales order with delivery related item category (Assigned to service contract, in my case we use WBS).
2. VF04 for billing as per plan
3. VL01N to deliver the quantity matching the amount
4. VF44 with reference to delivery.
Item category has revenue recognition 'B'.
Hope it gives some idea.
Thanks.
Rahul

Revenue recognition for Fixed price project

Dear Friends,
We are facing an issue with revenue recognition. This is with regard to fixed price project(Item catagory: FPR) wherein process follows with Sales order-->Delivery-->PGI--->Revenue recognition(VF44). Revenue recognition is carried out with reference to the delivery document.
After completing revenue recognition w.r.t the delivery document, still document is appearing in VF44 for revenue recognition. My understanding is it is not supposed to be appeared in VF44. One more thing is in VF44 "Follow On" document is appearing as Sales order number.
please suggest how to fix this issue.
with regards,
S Dayananda Murthy

Dear Dayananda
I think if you see Document number in VF44 It means That document is successfully Posted

Re: Revenue Recognition billing based

Hi,
We need this automatic when the payment is posted using tcode f-28. And those are not billing blocks. Those are revenue recognition block. Manually we can remove the block using VA44. We want it to be automated.
Thanks
Tirthankar

Tirthankar,
What is the Business requirement on this? Billing blocks system should remove Automated or Manual.
You can achieve this by VF04, with small abap changes.
Sales Document
Bill date from
bill date untill
Bill block
Only first u want to bill
or Range of periods u want to bill
Thank$
Hidayath

HELP: AR Open Invoices Conversion with Revenue Recognition (Daily Revenue)

Hi,
I need some help on Conversion of AR Open Invoices with Accounting Rules in R12, Here the client wanted to use Daily Revenue Schedule rule,
I am developing Functional Specification Document (CV.040); Need to understand the Assumptions, Approach and Which data needs to be extracted from Legacy System.
Appreciate your reply at the earliest
Thanks
Ravi

Anil,
Thanks for your response, Here are the answers to your questions.
1) The invoices that you want to convert - Do they already have revenue recognition on them?
Ans: Yes they have Revenue Recognition On Them.
2) Are you bringing only Open Invoices? What about Invoices that are closed (paid), but still have unrecognized revenue on them? DO you want to bring them
over? If no, how will be mage the recognition of those invoices?
Ans: We want to bring only Open Invoices. i.e the following scenarios want in Data Extraction
a) Invoice is Fully Paid (REC is Zero) and Unearned is Full Invoice Amount, Revenue is 0
b) Invoice is Partially Paid (REC is Partial) and Unearned is Partial, Revenue is partial
c) Invoice is fully Paid (Rec is Zero) and Unearned is Partial and Revenue is Partial
d) We do not want to bring the invoices with Fully Paid and Fully Recognized, Unearned is Zero
3) What about partially paid invoices? How do you want to bring them in?
Ans: See above scenarios.
4) Do you want to bring in all Invoice details,or just bring in a summary line with the outstanding amount?
we assume only Summary, but if the Invoices with Several Lines and Different Accounting Rules, We may have to bring them too
Appreciate your response; Suggest some possibilties?
Thanks
Ravi

Project System Cash Management in combination with statistical WBS element

Hi,
within a customer project, we have to solve the following issue:
Customer runs projects and statistical projects in combination with internal orders.
We want to use the PS Cash Management for planned and actual payments.
With statistical projects we have the following problem:
Invoice and actual payments will be processed with the transaction CJFN.
Actual payments are shown only on the internal order (transaction CJIA), but not on the statistical WBS element.
We want the information about the actual payments with in the project system reporting (S_ALR_87013574).
Projects, not flagged as statistical will deliver the expected results.
Many thanks for your ideas, to solve this problem.
Steffen

are u posting to some other cost object also. normally they wud have to be posted to a COPA also with the cost element being 11 category.
the wbs will receive the statistical posting, so there needs to be a real object also.
see whether the real object is getting derived.
the system is nt finding the real object and trying to post with the WBS in real, but since its statistical, the error.
any other calrifications. plz post.
regards
anantha

Revenue recognition combined with project billed via dip

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