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Oracle Receivables User Guide
Release 12.1
Part Number E13522-04
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Revenue Management

Recognizing Revenue

Run the Revenue Recognition program to generate the revenue distribution records for your invoices and credit memos that use invoicing and accounting rules. Accounting rules determine the number of periods and percentage of total revenue to record in each accounting period. Invoicing rules determine when to recognize the receivable for invoices that span more than one accounting period. See: Invoices with Rules.

When you submit the program, Revenue Recognition selects all transactions that have invoicing and accounting rules and that have not yet been processed since you last submitted the program. The program creates the revenue distribution records for all accounting periods specified by the accounting rule on each transaction line:

Note: Revenue Recognition creates accounting distributions for all periods of status Open, Future, or Not Open. If any period has a status of Closed or Close Pending, then Revenue Recognition creates the distributions in the next Open, Future, or Not Open period.

If you later decide that the GL distributions need to be reclassified, you can change the individual distribution on the transaction. Receivables will automatically create the reverse accounting entries.

If the Revenue Recognition program cannot create accounting distributions for a transaction, then the program generates the accounting for all other transactions in the submission, but completes with a status of Warning. Receivables includes the transaction at the bottom of the Revenue Recognition Execution report so that you know which transaction to correct, incomplete, or delete. See: Revenue Recognition Program Execution Report.

Note: Whenever you run the Submit Accounting program, Receivables first runs the standard Revenue Recognition program. See: Creating Accounting in Receivables.

Matching COGS with Revenue

Oracle Costing integrates with Receivables to ensure that, during revenue recognition and deferral activities in Receivables, COGS (Cost of Goods Sold) is recognized or deferred in the same percentage as revenue. COGS is the expense of manufacturing that is associated with the sale of goods. See: Overview of Revenue and COGS Matching, Oracle Cost Management User's Guide.

Prerequisites

To run the revenue recognition program:

There are two Revenue Recognition programs: Revenue Recognition and Revenue Recognition Master. The Revenue Recognition Master program is for parallel processing only and takes advantage of the Oracle scalability feature to reduce processing time by running on multiple processors, or workers. The Revenue Recognition Master program determines the maximum number of parallel processors needed for your transaction volume and uniformly distributes the processing over these workers. You can set a maximum number of processors for the Revenue Recognition Master program to use at runtime. This scheduling capability allows you to take advantage of off-peak processing time. You choose the Revenue Recognition program that you want to use at runtime.

Important: You cannot use the Revenue Recognition Master program on a system with less than two processors.

Tip: If you have a high transaction volume, we recommend that you run Revenue Recognition at regular intervals. This minimizes the number of transactions to process and improves performance.

  1. Navigate to either the Run Revenue Recognition or the Requests window.

  2. Choose the Revenue Recognition program you want to run:

  3. Choose a print format of either Summary or Detail.

  4. Select a parameter for the program you chose:

  5. Choose OK.

  6. Change the language if desired by choosing the Languages button.

  7. Schedule the run as needed. The default is As Soon as Possible. You can run Revenue Recognition more than once, as well, Periodically and/or on Specific Days.

  8. Choose to save the output of the Revenue Recognition program to a file by checking the Save all Output Files box.

  9. Choose Print Options to select print options, including the number of Copies to print, the Style, and the Printer to use.

  10. Choose Submit Request. Receivables displays the Request ID of your concurrent request and creates the Revenue Recognition Program Execution report.

    You can use the Request ID to view your submission in the Concurrent Requests Summary window. To see all of the revenue distribution lines that the program creates for this submission, use the: Revenue Recognition Program Execution Report.

Related Topics

Event-Based Revenue Management

Crediting Transactions

Importing Transactions Using AutoInvoice

Invoices with Rules

Revenue Recognition Program Execution Report

Use the Revenue Recognition Execution report to review all revenue distributions created for invoices that use invoice and accounting rules. This report displays the account class, GL Date, Accounting Flexfield, the currency, amount, and accounted amount for the revenue distributions Revenue Recognition creates for each transaction.

Receivables automatically creates the Revenue Recognition Execution report whenever you run the Revenue Recognition program, the Revenue Recognition Master program, or the Submit Accounting program.

When the Revenue Recognition program encounters transactions with problems that prevent the creation of distributions, the program completes with a status of Warning, and Receivables includes these transactions at the bottom of this report.

Tip: Always review the execution report after the Revenue Recognition program completes because, even if the program completes without a warning, transactions could still appear at the bottom of this report.

Related Topics

Recognizing Revenue

Posting

Event-Based Revenue Management

Revenue Accounting

Use the Revenue Accounting feature to quickly and easily adjust revenue and sales credits at the transaction or line level. You can make manual adjustments using the Revenue Accounting and Sales Credits window. Alternatively, use the Revenue Adjustment API to automatically perform these adjustments. See: Revenue Adjustment API User Notes in the Oracle Receivables Reference Guide.

Revenue Accounting uses the Revenue Accounting Management (RAM) wizard to guide you through the process of making and modifying revenue adjustments. You can also use the wizard to update expiration dates of existing revenue contingencies. For example, you can record early acceptance for an invoice line, if the line is associated with a contract that offers an acceptance clause.

Use the RAM wizard to:

You can make sales credit adjustments to completed invoices, credit memos, debit memos, and deposits only. You can make revenue adjustments to completed invoices and on account credit memos only. In addition, to make revenue adjustments to on account credit memos you must set the AR: Use invoice accounting for credits profile option to No. For all other credit memos, and if the profile option is set to Yes, Receivables prevents revenue adjustments.

Note: When making adjustments to transactions with rules, the invoicing rule must be In Advance.

To enter the RAM wizard, query a transaction in the Revenue Accounting and Sales Credits window and choose either Manage Revenue or Manage Sales Credits.

Tip: These buttons are controlled by function security. See: Function Security in Oracle Receivables, Oracle Receivables Implementation Guide.

Use the selection criteria listed below to optionally limit the lines that are affected by an adjustment or early acceptance:

See: Using the Revenue Accounting Management (RAM) Wizard.

When you make adjustments using Revenue Accounting, Receivables uses AutoAccounting to automatically generate all necessary accounting distributions. Before Receivables saves the adjustments, the distributions and/or sales credits resulting from the adjustment are displayed for your review. At this point, you have a final opportunity to approve or cancel the adjustments. In the case of a revenue adjustment, you can also modify the account distributions before saving.

You can also review your early acceptance and other revenue contingency actions before saving. In certain cases, recording early acceptance or expiring a contingency can trigger automatic revenue recognition for the invoice line. See: Evaluating Invoices for Event-Based Revenue Management.

Note: When you create or import an invoice, you can defer all revenue to an unearned account by assigning a deferred accounting rule to the invoice. At the appropriate time, you can recognize revenue manually using the Revenue Accounting and Sales Credits window or automatically using the Revenue Adjustment API. See: Deferred Accounting Rules, Oracle Receivables Implementation Guide.

Window Reference

When you query a transaction, the Revenue Accounting and Sales Credits window displays the following information:

Adjusting Sales Credits

If you transfer sales credit using the salesperson parameter All and the adjustable revenue parameter All Adjustable Revenue, Receivables transfers 100% of sales credit from all salespersons on the specified lines to the new salesperson.

If you select the salesperson parameter All and the parameter Percentage of Total Value of Selected Lines, Receivables transfers only the specified percent, prorated across the "From" salespersons based on their current sales credits.

For example:

Three salespersons are assigned to a transaction line with a revenue split of 20:30:50. If you transfer all adjustable revenue to a new salesperson, the new salesperson receives 100% (20 + 30 + 50). If you transfer 5%, however, the new salesperson receives 5% of the line total and prorates the transferred amount among the three salespersons. This table illustrates the transfer of sales credits in this example:

Salesperson Revenue Split Transfer Percentage Prorated Transfer Percentage
Salesperson 1 20 5% .05 * 20 = 1
Salesperson 2 30 5% .05 * 30 = 1.5
Salesperson 3 50 5% .05 * 50 = 2.5

When you specify a new salesperson, Receivables defaults the assigned sales group, if one is available. You can change the default.

Warning: Always use the Revenue Accounting Management (RAM) wizard, not the Transactions workbench, to adjust sales credits on a transaction, if that transaction's revenue was previously adjusted via the RAM wizard. See: Entering Revenue Credits.

Using the Revenue Accounting Management (RAM) Wizard

Use the Revenue Accounting Management (RAM) wizard to:

Prerequisites

To make revenue adjustments:

  1. When you navigate to the Revenue Accounting and Sales Credits window, the Find Transactions for Revenue Accounting window opens. In this window, enter query criteria for the transaction that you want to adjust, and click Find.

    The Revenue Accounting and Sales Credits window displays the transaction that you selected. If your query returned more than one transaction, then page down until you find the record that you want.

  2. Choose the Manage Revenue button.

  3. Select the type of adjustment that you want to make and click Next:

    If you want to record acceptance, see: Recording Early Acceptance.

  4. Optionally select a salesperson to restrict a revenue adjustment to the portion of revenue that is credited to that particular salesperson.

  5. Select a specific item, item category, or line number to limit the lines that are adjusted.

    Warning: If you set AutoAccounting to derive any accounting segments from a standard line, the transaction line must be either an inventory item or standard memo line. Otherwise, AutoAccounting cannot create the valid GL account code combination.

  6. For partial adjustments, select either an amount or percentage. To adjust the full amount, select All Adjustable Revenue.

    Note: Oracle Receivables allows you to do revenue adjustments on invoices that have been fully credited. Although the amount you can earn or unearn on a fully credited invoice is zero (under almost every circumstance), this functionality lets you use the Revenue Accounting Management (RAM) wizard to adjust the earned or unearned revenue for an invoice with a deferred rule.

  7. In the Reason field, select the reason code for this adjustment from the list of values.

  8. Optionally change the GL start date and add comments to this adjustment.

    When you update the GL start date, Receivables ignores the original rule start date entered via the Transactions workbench and accepts the GL date that you enter as the start date for revenue recognition, provided that:

    If a multi-period accounting rule exists and is not deferred, Receivables ignores the GL start date and uses the original revenue recognition schedule on the transaction, based on the rule start date entered via the Transaction workbench.

    See: Deferred Accounting Rules, Oracle Receivables Implementation Guide.

  9. After you make the adjustment, review the adjustment in the Action Results window. You can modify the adjustment's GL distributions before you save the results.

    Note: To ensure account reconciliation, any revenue adjustments that you make to an invoice should also be made to that invoice's related credit memos.

    You can make revenue adjustments to on-account credit memos only. In addition, you must set the AR: Use invoice accounting for credits profile option to No. For all other credit memos, and if the profile option is set to Yes, Receivables prevents revenue adjustments.

To adjust sales credits:

  1. Navigate to the Revenue Accounting and Sales Credits window and enter your query criteria.

  2. Choose the Manage Sales Credits button.

  3. Select the type of adjustment that you want to make and click Next:

  4. Specify the From and To Salespersons for this action.

    Select the salesperson(s) and the sales credit type that you want to adjust.

    Receivables defaults a sales group, if available, for each salesperson that you specify. You can change the default.

  5. Select a specific item, item category, or line number to limit the lines that are adjusted.

    Warning: If you set AutoAccounting to derive any accounting segments from a standard line, the transaction line must be either an inventory item or standard memo line. Otherwise, AutoAccounting cannot create the valid GL account code combination.

  6. For partial adjustments, select either an amount or percentage. See: Adjusting Sales Credits.

  7. In the Reason field, select the reason code for this adjustment from the list of values.

  8. Optionally change the GL start date and add comments to this adjustment.

    When you update the GL start date, Receivables ignores the original rule start date entered via the Transactions workbench and accepts the GL date that you enter as the start date for revenue recognition, provided that:

    If a multi-period accounting rule exists and is not deferred, Receivables ignores the GL start date and uses the original revenue recognition schedule on the transaction, based on the rule start date entered via the Transaction workbench.

    See: Deferred Accounting Rules, Oracle Receivables Implementation Guide.

  9. After you make the adjustment, review the adjustment in the Action Results window. You can modify the adjustment's GL distributions before you save the results.

To manage revenue contingencies:

  1. Navigate to the Revenue Accounting and Sales Credits window and enter your query criteria.

  2. Choose the Manage Revenue button.

  3. Select Modify Revenue Contingencies.

  4. Optionally select a salesperson to restrict a revenue adjustment to the portion of revenue that is credited to that particular salesperson.

  5. Select a specific item, item category, or line number to limit the lines that are adjusted.

    Warning: If you set AutoAccounting to derive any accounting segments from a standard line, the transaction line must be either an inventory item or standard memo line. Otherwise, AutoAccounting cannot create the valid GL account code combination.

  6. Select the transaction line whose contingency you want to adjust. Then, in the Line Revenue Contingencies region, adjust the contingency's expiration date attributes:

Note: If a parent-child relationship exists from Oracle Order Management, then you can manage contingencies only on the parent lines. Child lines inherit contingencies from parent lines.

To record early acceptance:

  1. Navigate to the Revenue Accounting and Sales Credits window and enter your query criteria.

  2. Choose the Manage Revenue button.

  3. Select the Record Acceptance option and click Next.

  4. Select a specific item, item category, or line number to indicate the line or lines that you want to accept.

  5. The next window displays the lines that Receivables will record early acceptance for.

    Click Next to accept the selected lines.

  6. Review the results in the Results window.

Related Topics

Event-Based Revenue Management

Event-Based Revenue Management

The Revenue Management Engine automates the timing of revenue recognition for manually entered invoices, or invoices imported via AutoInvoice. If you use event-based revenue management, then Receivables evaluates these invoices and decides whether to immediately recognize revenue, or temporarily defer revenue to an unearned revenue account.

Revenue is subsequently recognized depending on certain events, such as customer acceptance or receipt of payment.

The automated process occurs as follows:

  1. Receivables evaluates an invoice when manually entered or imported.

    When first evaluating an invoice for revenue recognition or deferral, Receivables checks transaction lines to determine if any revenue contingencies exist.

    Contingencies are defaulted to invoices when imported from a feeder system or entered manually in the Transactions workbench. Receivables defaults contingencies if the enterprise revenue policy has been violated, or if certain conditions on the related sales order or contract exist.

    Receivables does not default contingencies to imported transaction lines that have deferred accounting rules.

    If revenue must be deferred, then the Revenue Management Engine does so and records the reason for the deferral.

  2. Receivables then waits for an event that can remove the contingency and trigger revenue recognition. The Revenue Contingency Analyzer monitors contingencies until they expire or are removed. When such an event occurs, the Revenue Contingency Analyzer can automatically recognize the appropriate amount of unearned revenue on the invoice.

    Specifically, revenue is scheduled according to the initially assigned accounting rules and rule start dates. For invoice lines without accounting rules, the revenue date is set to the latest contingency removal date.

See: Evaluating Invoices for Event-Based Revenue Management.

This automated revenue management process helps you to comply with the strict revenue recognition requirements mandated by US GAAP and International Accounting Standards.

Note: Even if you enable this automated revenue recognition process, you can always use the Revenue Accounting Management (RAM) wizard to manually adjust revenue. See: Revenue Accounting and Modifying Invoices Under Collectibility Analysis.

However, once you manually adjust revenue, Receivables discontinues the automatic monitoring of contingencies.

Prerequisites

Note: You cannot use this functionality with Oracle Projects invoices, because revenue from Projects is recorded directly in the general ledger, not in Receivables.

Related Topics

Evaluating Invoices for Event-Based Revenue Management

Evaluating Invoices for Event-Based Revenue Management

The Revenue Management Engine controls the process of automatically analyzing collectibility and then making revenue recognition decisions for your manually entered and imported invoices.

This process is automatically enabled if:

The Revenue Management Engine decides whether to initially distribute revenue to an earned or unearned revenue account.

Once this decision is made, AutoAccounting creates the actual accounting distributions, either by AutoInvoice (for invoices without rules) or by the Revenue Recognition program (for invoices with rules).

Note: Or, to pass accounting distributions to Receivables through the AutoInvoice interface tables, set the Override AutoAccounting flag and assign the Immediate accounting rule to each billing line. See: AutoInvoice Table and Column Descriptions, Oracle Receivables Reference Guide.

The Revenue Management Engine does not analyze collectibility for invoices that are assigned deferred accounting rules. To recognize revenue for an invoice with a deferred accounting rule, use the Revenue Accounting Management (RAM) wizard. See: Revenue Accounting.

Note: The timing of revenue recognition does not impact the timing of recognition of taxes, freight, and late charges. Recognition of taxes, freight, and late charges occurs when the receivable is created.

Tip: You can query an invoice in the Transactions workbench at any time to review the invoice's accounting distributions.

See: Reviewing Accounting Information.

Revenue Contingencies for Event-Based Revenue Management

The Revenue Management Engine considers any existing revenue contingencies when evaluating your invoices for revenue recognition.

If an invoice has no such contingencies, then the Revenue Management Engine immediately recognizes revenue (for invoices without rules) or recognizes revenue according to the initially assigned accounting rules (for invoices with rules).

If an invoice has one or more contingencies, then the Revenue Management Engine immediately defers revenue.

The extent of the revenue deferral, and subsequent timing of revenue recognition, depends on the contingency.

The following table indicates each contingency that Receivables provides, and its corresponding removal event:

Contingency Name Contingency Removal Event
Cancellation Contingency expiration date or expiration period
Customer Creditworthiness Receipt application
Delivery Proof of Delivery
Doubtful Collectibility
Due to conditions such as:
  • Late charges

  • Other fees

Receipt application
Explicit Acceptance Customer acceptance
Extended Payment Term Receipt application
Fiscal Funding Clause Contingency expiration date or expiration period
Forfeitures Contingency expiration date or expiration period
Impaired Loans Receipt application
Installation Customer acceptance
Leasing Doubtful Collectibility
Due to conditions such as:
  • Lease payments for evergreen lease agreements

  • Miscellaneous leasing fees

Receipt application
Pre-Billing Acceptance Invoicing
Refund Contingency expiration date or expiration period

Note: You can define your own contingencies, as well as defaulting rules for contingency assignment. See: Defining Revenue Contingencies, Oracle Receivables Implementation Guide.

Related Topics

Event-Based Revenue Management

Contingency-Based Deferred Revenue Report

Payment-Based Revenue Management

Certain revenue contingencies place the likelihood of collectibility in doubt. For such transactions, you should not recognize revenue until you receive payment. Oracle Receivables automates this process with Payment-Based Revenue Management.

See: Contingencies for Payment-Based Revenue Management.

If certain revenue contingencies are found on an invoice, then:

If Receivables bases revenue recognition on receipt application, then the total amount of revenue that is recognized can never exceed the original amount due on the invoice line, less any applicable credit memos.

If you later need to reverse a receipt after application, then Receivables automatically moves the amount of the reversed receipt back to an unearned revenue account. See: Modifying Invoices Under Collectibility Analysis.

Note: If you are applying a receipt to an invoice with rules, but you haven't yet run Revenue Recognition, then Receivables automatically runs Revenue Recognition for that invoice only.

See: Evaluating Invoices for Event-Based Revenue Management.

Contingencies for Payment-Based Revenue Management

Payment-based revenue management occurs when deferred revenue exists on the invoice due to these revenue contingencies:

Deferred revenue can exist on an invoice due to a combination of the contingencies listed above, as well as time-based contingencies. In such a case, applied payments initiate revenue recognition only if time-based contingencies have expired.

See: Event-Based Revenue Management When Multiple Contingencies Exist.

Payments that do not initiate revenue recognition

Receipt application has no impact on revenue recognition if:

Related Topics

Event-Based Revenue Management

Applying Receipts

Contingency-Based Deferred Revenue Report

Calculating Revenue for Partial Receipt Application

When applying a partial receipt, Receivables uses a weighted average formula to calculate the revenue amounts to recognize for each line.

For example, you import a $350 invoice with three lines.

When you imported this invoice, the Revenue Management Engine deferred all revenue on this invoice because the customer was not creditworthy.

Later, you apply a receipt for $100 against this invoice. Because customer is not creditworthy, Receivables can recognize revenue only to the extent of the applied receipt. Because this is a partial receipt, Receivables must calculate how much revenue to attribute to each invoice line.

Receivables calculates the revenue for each line as follows:

For additional receipts against this invoice, Receivables calculates the revenue for each line using this same method.

Tip: You can also apply receipts at the line level. See: Applying Receipts in Detail.

Overpayments

Revenue that is recognized based on receipt application can never exceed the original amount due on the invoice line, less any applicable credit memos. Therefore, in the event of an overpayment, Receivables will not recognize the overpayment as revenue, even if you selected the Allow Overapplication check box on the invoice's transaction type.

Receipt Application Examples

These examples illustrate the impact of receipt applications on the event-based revenue management process.

Scenario 1

You apply a payment for $200 against invoice 1001.

Scenario 2

You apply a payment for $600 against invoice 2002. The amount due on this invoice is $600.

Scenario 3

You apply a payment for $400 against invoice 3003. This invoice has 5 lines: Line 1 is $200, Line 2 is $450, Line 3 is $100, Line 4 is $700, and Line 5 is $550.

Monitoring Contingencies with the Revenue Contingency Analyzer

The Revenue Management Engine immediately defers revenue on any invoice line that is associated with a time-based contingency. Receivables uses the Revenue Contingency Analyzer to monitor contingencies until they expire.

Once a contingency expires, the Revenue Contingency Analyzer automatically initiates revenue recognition for the related invoice line(s).

Note: After a contingency period expires, the Revenue Contingency Analyzer does not initiate revenue recognition if other contingencies still exist which place into doubt the collectibility of the entire invoice. In this case, Receivables can recognize revenue only in the amount of applied receipts. See: Payment-Based Revenue Management.

The Revenue Contingency Analyzer is a concurrent program. You can define a submission schedule that controls how frequently the program will run. For example, you can define your schedule to run the program repeatedly at specific intervals, or on specific days of the week or month.

Note: Whenever you run the Submit Accounting program, Receivables first runs the Revenue Contingency Analyzer.

Time-Based Contingencies

Time-based contingencies include:

If multiple contingencies exist on multiple invoice lines, then revenue recognition can occur at different times for different lines on the invoice. If multiple contingencies exist on a single invoice line, then revenue recognition for that line occurs only after the latest contingency expires.

For example, you enter or import an invoice for a creditworthy customer, and one of the invoice lines is associated with both a nonstandard refund policy (50 days) and an acceptance clause (120 days). Receivables will not recognize revenue on this invoice line until the acceptance clause expires after 120 days.

If you obtain written acceptance from the customer after 80 days have elapsed, then use the Revenue Accounting Management (RAM) wizard to record the early acceptance. Since no other contingencies exist, this early acceptance triggers revenue recognition. Note that the GL date when you enter this early acceptance becomes the revenue recognition date for this invoice line.

Event-Based Revenue Management When Multiple Contingencies Exist

A single invoice may contain both time-based contingencies, as well as contingencies that require payment before revenue can be recognized. In this case, revenue recognition will occur at different times for different lines on the invoice.

Upon receipt application:

For example, you enter or import an invoice for a customer who is not creditworthy. Additionally, Line 2 of the invoice is associated with a nonstandard refund policy (80 days).

Revenue Contingency Analyzer Examples

In the examples below, the Revenue Contingency Analyzer runs every 30 days.

Scenario 1

You enter a customer invoice with 6 lines. Lines 2 and 3 are associated with a fiscal funding clause (60 days) and Line 5 is associated with a cancellation provision (90 days).

Scenario 2

You import a customer invoice with 2 lines. Line 1 is $150 and Line 2 is $1,000. Line 2 is associated with an acceptance clause (60 days) and a cancellation provision (150 days). Additionally, the customer has been granted extended payment terms on this invoice.

Related Topics

Event-Based Revenue Management

Evaluating Invoices for Event-Based Revenue Management

Contingency-Based Deferred Revenue Report

Submitting a Request, Oracle Applications User's Guide

Modifying Invoices Under Collectibility Analysis

You can modify invoices or invoice lines that are still under collectibility analysis. Modifications to invoices include:

When modifying invoices under collectibility analysis, however, you should be aware of the following:

Using the Revenue Accounting Management (RAM) Wizard

You can use the RAM wizard to manually adjust revenue on an invoice or invoice line that is under collectibility analysis.

When you move revenue on an invoice or invoice line from an unearned to earned revenue account, or vice versa, Receivables removes the invoice or invoice line from further collectibility analysis. The invoice is no longer subject to automatic revenue recognition.

Note: Adjustments of sales credits performed with the RAM wizard do not impact future collectibility analysis, because you can use the RAM wizard to adjust sales credits only for revenue that has already been scheduled.

Adjusting Invoices

You can manually adjust an invoice that is under collectibility analysis. However, if the GL Account Source for the specified adjustment activity is Revenue on Invoice, then Receivables removes the invoice from further collectibility analysis after making the adjustment.

This is because Receivables calls the Revenue Adjustment API if revenue on the specified invoice is unearned. The Revenue Adjustment API uses AutoAccounting to derive the anticipated revenue accounting distribution accounts and amounts, thereby overriding the event-based revenue management process.

If you want Receivables to continue monitoring an invoice for automatic revenue recognition, then always use a credit memo to adjust an invoice under collectibility analysis.

Using the Transactions Workbench to Modify Accounting Distributions or Sales Credits

You can manually change the accounting distributions and sales credits for an invoice that is under collectibility analysis. When making a change in either the Distributions window or Sales Credits window, Receivables removes the invoice from further collectibility analysis if:

Warning: You should always use the RAM wizard, not the Transactions workbench, to adjust sales credits on a transaction, if that transaction's revenue was previously adjusted via the RAM wizard. See: Entering Revenue Credits.

Crediting Invoices

If you issue a credit memo against an invoice whose revenue was automatically deferred upon import, then the impact of the credit memo differs depending on the original reason for the revenue deferral. This is applicable only if you set the Use Invoice Accounting for Credit Memos profile option to Yes.

For example, perhaps you apply a credit memo against an invoice whose revenue was initially deferred due to one or more contingencies, but was later partially recognized. A portion of this invoice's revenue, therefore, is still in an unearned revenue account.

See: Credit Memos Against Invoices Under Collectibility Analysis.

Crediting Manually Adjusted Invoices

If you apply a credit memo against an invoice whose revenue was already manually adjusted via the RAM wizard, then Receivables follows standard credit memo functionality. Even if the invoice was initially analyzed for collectibility and acceptance, Receivables prorates the credit memo amount between the earned and unearned revenue amounts on the invoice.

In that case, you must confirm that the earned and unearned revenue on the invoice is stated appropriately for each period. If necessary, use the RAM wizard to make any further adjustments.

Incompleting Invoices

In the Transactions workbench, you cannot incomplete invoices that initially failed collectibility and acceptance analysis, and which are still under analysis for future event-based revenue management.

Reversing Receipts

If you apply a receipt against an invoice whose revenue was automatically deferred upon import, and you later reverse that receipt, then the impact of the receipt reversal differs depending on the original reason for the revenue deferral:

Scenario 1

You import a customer invoice with 3 lines. All lines are associated with a nonstandard refund policy (90 days). In this case, Receivables recognizes revenue only upon the expiration of the 90-day period. Applying and later reversing a receipt against this invoice has no impact on the timing and amount of revenue recognition.

Scenario 2

You import a customer invoice with 2 lines. Line 1 is $226 and Line 2 is $350. Line 2 is associated with a cancellation provision (120 days). Additionally, the Revenue Management Engine finds that the customer is not creditworthy.

Related Topics

Event-Based Revenue Management

Revenue Exceptions Report