Revenue Recognition Forecast Based on Quotations

I have a requirement to create a revenue recognition forecast based on the open quotations. These quotations linked to opportunities are open for some time before being signed and provide a good basis for forecasting revenue recognition in upcoming quarters. We have many revenue recognition methods here including time based, service based, collection based, POD, and POC. I don't see much useful standard functionality in SD revenue recognition nor in results analysis for creating these forecasts from quotes.
The SD revenue schedules in tables VBREV* are not generated on quotation document lines nor on items that are not billing relevant. RA can be run in planning mode, but it is a secondary process on the saved data in CO on a cost object that must be run individually for each future period.
Not only do we need the Revrec forecast, but we want to simulate changes to our quotes and projects and immediately see the affect on Revrec. I am about to create a custom development within sales document processing to create the Revrec forecasts in a rough manner in a Z table. Before I start to code, I am curious to know if anyone else has had such requirement and has better ideas of how to accomplish this.

Hello Karl,
The Best Practices document in the Note 1172799 provides details regarding all the SAP supported processes for RR functionality.
Regards,
Raghavendra

Similar Messages

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

Revenue Recognition Tied to Invoice

Hi All,
We have a following requirement to meet for our revenue recognition process. I would like to know if it is possible to achieve in version 11.5.10.2.
Currently in Oracle 11i (11.5.10.2), revenue recognition is tied to invoices. We have created accounting rules, and invoicing rules to recognize the revenue. However, since the revenue recognition is tied to invoice, we are facing the following problem.
For Example, We have a contract spanning three years duration with the total contract value of $300,000. The client pays $50,000 in first year, $100,000 in second year and $150,000 in the final year. As per the functionality in 11i, our first year revenue recognition is breaking into $4166.66 every month ($50,000/12 Months), second year revenue breaking into $8333.33 ($100,000/12 months), and the third year revenue breaking into $12,500 every month ($150,000/12 Months). Instead of this, we would like to recognize the monthly revenue as $300,000 / 36 Months, even though the invoice schedule is as mentioned earlier (50k invoice in the 1st year, 100k invoice in the 2nd year, and 300k invoice in the 3rd year).
1. Is this functionality/requirement possible to achieve in 11i ? with or without customization? if with customization, please provide details on what API/package/process/setups to be customized?
2. Is this functionality/requirement already available in R12? partially achievable or completely achievable?
Any suggestions/inputs will greatly help us.
Thanks.
Abm

Hi Abm,
You have rightly mentioned in your first note that the revenue recognition is tied to the Invoice. At given time, the amount of revenue recognized on an invoice is always less than or equal to the Invoice Amount. So, in order to recognize the revenue, you need to have an invoice.
You have mentioned in your previous note that you may generate one or multiple invoices in a year and no mater how many invoices you generate, you still want to recognize 8333.33 (i.e. 300,000/36) each month. As per standard functionality, this is not possible. Reason - Revenue Recognition is based on the Invoice and the Invoice amount. Your requirement actually gives rise to another question. If you havent invoiced the customer in the first month, what will be the accounting entry for the revenue recognition of $8333.33?
I can think of some workable solution, but first I need to understand the accounting for this.
Thanks,
Anil

Revenue Recognition based on percentage of completion of work.

Hello Experts,
My customer has the following scenario for revenue recognition.
My customer sell services. So I create a project and attach to the sales contract which has mile stones for billing.
After completion of milestones, billing is triggered automatically. No issues on this part.
When comes to revenue recogntion, they recognise the revenue after the work completion and nothing related to billing.
They take forecasted manhours(planned hours) for the services and take the time sheet hours (actual hours) and calculate the percentage of completion. They apply the percentage in revenue and based on the percentage of completion, they do revenue recognition.
My questions..
1. Is this a standard functionality in SAP? My customer is in sap 4.7
2. If this is not a standard functionality, then how to tackle this issue. Is there any work around?
Any type of help would be grateful.
Regards
Srinivasan Desingh

Hello,
The Best Practices document alongwith the scenarios supported in standard SAP is available as an attachment in the Note 1172799.
Regards,
Raghavendra YN

Revenue Recognition based on User Status of assigned Sales Order line item

Dear Community members,
We have requirement to recognize / de-recognize revenue posted to WBS for calculation of RA, based on the 'User status' of the assigned Sales Order line item.
To elaborate requirement further -
1) WBS Element - XXX - 10 ( with operative indicator - Plan/Bill/Account Assign)
2) Sales Order(SO) Line Items assigned to the above WBS -
- SO No - 123 Line Item 10 - Actual Rev - $ 300 - User Status - EXE (Meaning this work is in progress , partial payment received thus actual revenue for RA at WBS is 'Zero'
- SO No - 124 Line Item 20 - Actual Rev - $ 400 - User Status - COMPL(Meaning this work is Complete , all payment received thus actual revenue for RA at WBS is $400
- SO No - 125 Line Item 10 - Actual Rev - $ 800 - User Status - EXE (Meaning this work is in progress , partial payment received thus actual revenue for RA at WBS is 'Zero'
As per WBS reports Actual Revenue posted to WBS XXX-10 is $ 1500 ( $300$400$800) , however since two SO line items ( SO 123 /line item 10 and SO 125 / line Item 10 ) are NOT having User status 'COMPLETE', the actual revenue posted by those line items $ 1100/- ($300 + 800) should not be included as Actual Revenue for RA at WBS level.
Thus Actual Revenue for RA at WBS XXX-10 should be $ 400 /- ( the revenue posted by SO 124/line item 20 which has user status as 'COMPLETE')
How do above can be achieved?? Is there any standard solution for this?? Is any SAP Note available for this (I too am looking for one but not found any ) ?? do we need any enhancement , Customer exit etc
Thanks in advance
with regards

Hi,
Thanks. You are right that the 'Completed Contract Method' would defer revenue recognition. However, the status checked would be of the RA object (WBS Element in this case, as RA key is on WBS and RA is being calculated on the WBS).
However, our requirement is to check the user status of the Sales Order Line items assigned to the WBS element and filter the revenues posted based on the active user status of individual Sales Order Line item.
Please give you inputs.
Thanks in advance
With regards

Revenue & COGS recognition process based on Proof Of Deliver (POD) & Inco-T

Hello Experts,
I have a senario and i am trying to find out the proper solution for my client, hope you people can help me in this.
Requirement :     Revenue & COGS recognition process based on Proof Of Deliver (POD) & Inco-Terms
Steps     :At present system is posting COGS at the time of Out Bound delivery and Revenue at the time of commercial invoice.
(1)     Current Requirement:
If the Inco-Term is other than Ex-works then both COGS and revenue to be posted(Recognized) based on the POD.
If the Inco-Term is Ex-works then system should post COGS at the time of Out Bound delivery and Revenue postings to happen once Commercial Invoice is Authorized.
(2) _Following are the Postings to happen in a sequential way if the Inco-Term is other than Ex-work
   a. When Out Bound delivery is authorized then system should operate the Stock in transit for customers instead of
       COGS account as mentioned below.
                 Dr. Stock in Transit-Customers
                 Cr. Respective Stock Account
Note: We understood that this provision not available in SAP at this point of time and this entry should not considered in costing for COPA
                 b. Based on the Out Bound delivery a provisional invoice(without postings) has to be generated and Excise duty entry has to be posted as mentioned below
                 Dr. Duty Paid Account
                 Cr. 23A/23C/PLA
                 C. Once the POD is received and recorded in system then the respective Out Bound delivery
                 related accounting entry has to be reversed as mentioned below.
                 Dr.COGS
                 Cr. Stock in Transit-Customers
Note: This entry should be considered in costing for COPA
               D. Once the outbound delivery (above) is reversed then the system should generate the Sales
     Invoice based on POD as the entries mentioned below
                 Dr. Customer
                 Cr. Revenue & Payable accounts
Note: We understood that this provision is available in SAP
Thanks
Rahul

Hello Karl,
The Best Practices document in the Note 1172799 provides details regarding all the SAP supported processes for RR functionality.
Regards,
Raghavendra

Service Based Revenue Recognition - Prov Account Missing when using WBS

Hi,
I´ve activated RR functionality using service based and aceptance date.
I've followed the intructions from the best practices documents and the notes:
Note 820417 u2013 IMPLEMENTATION GUIDE FOR REVENUE RECOGNITION
Note 1172799 u2013 NEW VERSION OF BEST PRACTICES FOR REVENUE RECOGNITION
Note 678260 CONSTRAINTS
Note 777996 u2013 ACCOUNT SETTINGS FOR REVENUE RECOGNITION PROCESS
Note 779366 u2013 REVENUE RECOGNITION IN THE SD MODULE
Note 1166848 u2013 CUSTOMIZING SETTINGS
Note 782758 u2013 PREREQUISITS FOR USING REVENUE RECOGNITION
Note 835367 - Activating SAP ERP SD revenue recognition
Note 1000830 - Revenue recognition through incoming invoice (third-party
Note 1025066 - Revenue recognition by proof of delivery (POD)
Note 1120297 - Revenue recognition by acceptance date
Note 1125456 - Revenue recognition due to customer-specific event
We are implementing SD, FI (using New Gral Ledger), PS, CO and MM in a company that sells projects. Therefore we're posting everything to the WBS elements.
We need to post the revenue values to the WBS elements too.
The problem is that when we create a sales order for RR indicating a WBS element and try to save it, the system activates the incompletion log saying that the provision account is missing, despite the account is in VKOA.
The strange thing is that if we use a material with profit center (without any WBS or order indication in the sales order) all the revenue recognition process runs perfectly (we save the order, VBREVK is fullfiled, VF44 is run and the invoice is done correctly).
Does anybody know why when using a WBS element in the sales order, SAKN2 field is not fullfiled and the incompletion log is activated???
Is it a program error? Or are we doing something wrong?
Quick responses will be apreciated since we need to move on within two weeks!
Thanks in advance!
María del Valle Pintor.
Moderator: This thread has been locked due to crossposting.
Please do not post the same question in different forums.

sap note 883544

Revenue Recognition :- Type A : Time Based Revenue Recognition in Contract

Hello,
I am facing a peculiar problem while creating the contract relevant for Revenue Recognition Type A : Time Based Revenue Recognition in Contract.
The Item category setting I am using is as follows:-
1.     Rev. recognition : A : Time-related revenue recognition
2.     Acc. period start : B : Proposal based on billing plan start date
3.     Revenue Dist. : A : Total Val.: Linear and Correction Value Linearly Distributed
I have already done the necessary activation of Revenue Recognition.
Done the account determination for following :-
1.     Revenue account determination (VKOA)
2.     Deferred revenue (VKOA)
3.     Unbilled receivables (OVUR)
Still when I am trying to save the contract the document goes into Incompletion asking for "GL account for item 10"
Where as in account determination analysis the system has already showing the
1.     Revenue account
2.     Deferred revenue account
Kindly guide further.
Thanks & Regards,
Amrish Purohit

Hi
you can overcome this issue of G/l account missing while saving the document is by assigning the Account key of that condition type in
img-> sales and Disrtibution->account assignment /Costing->revenue account determination-->defina and assign account keys
here you have to assign the account keys you are using for that condition type in pricing procedure against the same conditiontype in the accurals field.
this will solve your problem

Service based revenue recognition (u0091Bu0092) contract with call off

I am trying to understand Revenue Recognition. I have come across the above term." Contract with call off"
Can anyone tell me what exactly this means.

Dear sap
The contract consists of items defining the individual materials, material groups, or services with prices and in many cases quantities.
An item is assigned to an item category, which defines the type of procurement (e.g. item category K for consignment, or L for subcontracting).
An item of the procurement type "external service" contains a set of service specifications. Such specifications may be hierarchically structured. The summary view of such a hierarchical structure is termed an "outline", and the individual levels of the hierarchy are referred to as "outline levels". Quantities are specified in service lines. Services can be released (<i>ordered, or called off against the contract</i>) at item level or at the level of the service line.
Thanks
G. Lakshmipathi

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$

Revenue recognition at the time of Delivery - COPA

Dear Gurus,
Our sales cycles are bit different than the standard sales process.
In one of the sales cycle the business does the Billing first and delivery later and the revenue recognition should happen at the time of delivery not billing.
How do I achieve the same in COPA data flow and is this a reason why I should activate account based copa?
Regards
Roy
Edited by: roy001 on Mar 27, 2011 8:03 PM

Hi
Thank you for you comments.
Our business scenario is car sale- The car dealer looks into portal(called dealer portal) and checks the availability of a car.
Once the dealer makes the car selection, he then places an purchase order to the car manufacturer.
Based on the order the car manufacturer asks for the full payment from the dealer. After receiving payments, the car manufacturer delivers the car.
Therefore the invoice is raised before delivery.
The problem that we have in the above scenario is the COPA value flow. How do I flow the values into copa?
Any input?
Many thanks.
Regards
Roy

Revenue Recognition in BW

Hi Gurus,
We have a new requirement to perform Revenue Recognition based on custom rules within BW. Have any of you built or worked on such a solution? If yes can you please provide some useful information or documents on it?
Bit more background on this:
As per the requirement, this new solution has to read receipt and refund information from a couple of third party systems. BW will also get the contracts and customer master data. Then based on the contract start and end date and other custom rules, bw acts as a revenue recognition engine and generate and post GL entries to ECC.
Any tips or advises are greatly appreciated.
Regards

Dear Krishna
A tough one. You are making BW a transaction system. My thoughts
* Use an LSA kind of structure for your requirement . (staging DSO to bring in 3rd party details)
* Try to define the logic in the field level routines in the subsequent flow
Once you provide more details like what kind of logic are you going to implement some ideas can be given,
Work on the solution design before you put your hands on the development
Best of luck
Gajesh

Revenue Recognition in Russia

Hi,
we are rolling out our global SAP solution for Russia and I would like some valuable inputs from SAP Gurus to my query.
My query is regarding revenue recognition in Russia. According to local GAAP, unless a signed copy of the TORG-12 (Act of acceptance of the transfer of goods) is received from the customer, it cannot be considered as revenue for accounting purposes in Russia, whereas for US GAAP purposes revenue can be recognized once the goods have been delivered.
US GAAP is the leading ledger and Russian GAAP is the non leading ledger but it is not possible to release billing to accounting for the leading ledger only.
Another point to note is that Russian accounting is based on actuals and no accruals can be posted for revenues.
Pls. can someone provide me some insight as to how these two requirements were handled together in their projects within SAP.
We are on SAP ECC version 6 ehp4.
Thanks in advance for all your help.
Regards,
Nitin

Dear Deepu,
The Concept of "Revenue Recognition" in Item Category is -
The material, with specified Item Category, is defined for income-accrual or not.
Now, Income-accrual means, say, in a month, you have "n" no. of orders to deliver, but might possible that Invoice and Payment, may get done or may not be.
So, to realise such income for a particular period, we run revenue-recognition (VF44). In VKOA, we maintain "Provisional Account" for such income.
Once invoiced, Accrued income G/L gets debited and Customer G/L gets credited.
[Revenue Recognition|http://help.sap.com/erp2005_ehp_03/helpdata/EN/4d/fcd139f6e4cf2ce10000000a114084/frameset.htm]
As you asked for maintaining - Type "A" in Item Cat., go through
[Time related Rev. reco.|http://help.sap.com/erp2005_ehp_03/helpdata/EN/59/aff23cd85c11d199d60000e8a5bd28/frameset.htm]
Another Type is "B"
[Service related Rev. reco.|http://help.sap.com/erp2005_ehp_03/helpdata/EN/59/aff23fd85c11d199d60000e8a5bd28/frameset.htm]
Best Regards,
Amit
Note: There are few of my posts in threads
Re: Revenue recognition
Re: Revenue recognition design
this will provide some in-sights for rev. recog.

Blocking Periodic Revenue recognition without billing block

Hi All,
I am posting here first time and need some help with Periodic Revenue Recpgnition.
We have scenario where User wants to control the Revenue Recognition based on some contingency flag in Sales Order. If that flag is set then Periodic monthly Rev. Recog should not happen but when user unsets that flag in SO line item then Rev Recog should happen.
I know for Service Based Rev Recog there is a solution SAP provides as Customer Event Type by which we can achieve this without stopping invoicing.
But i am not sure how to block the Rev Recog to occur for Periodic Rev Recog as Customer Event type is not configurable in Item Category with Time-Related Rev Recog (A).
Please suggest some solution on how to achieve this goal with Periodic Rev Recog.
I will give full points for any good suggestion.
Thanks
Ravi

hi
check is there any user exit or BADI available.

Revenue Recognition Forecast Based on Quotations

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