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Oracle Receivables Implementation Guide
Release 12.1
Part Number E13510-04
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Revenue Management

Defining Revenue Contingencies

Using event-based revenue management, Receivables can automatically evaluate your invoices to determine 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.

Receivables makes these automatic revenue recognition or deferral decisions based on your organization's established revenue policy, and the existence of any revenue contingencies on the invoice line. See: Defining Your Revenue Policy.

Revenue contingencies are terms and conditions in a sales contract or order that prevent revenue from being immediately recognized, based on strict revenue recognition requirements mandated by US GAAP and International Accounting Standards. Typical contingencies that can delay revenue recognition are fiscal funding clauses (for government contracts), cancellation clauses, customer acceptance clauses, customer creditworthiness, nonstandard payment terms, and nonstandard refund policies.

The extent of the revenue deferral, and subsequent timing of revenue recognition, depends on the revenue contingency. Each contingency has its own related contingency removal event:

Receivables predefines a set of revenue contingencies that you can use with event-based revenue management. You cannot update or delete these predefined revenue contingencies, but you can create your own. Receivables also predefines contingency removal events, which you cannot delete or modify.

For a list of these predefined revenue contingencies, along with corresponding contingency removal events, see: Evaluating Invoices for Event-Based Revenue Management, Oracle Receivables User Guide.

For each contingency, you can define automatic defaulting rules to control which contingencies are assigned to which customer invoices. See: Assigning Contingencies.

To define a revenue contingency:

  1. Navigate to the Revenue Contingencies page using the Revenue Management Super User responsibility.

  2. Duplicate and then modify an existing contingency. Or, define a new contingency.

    Tip: For easier contingency auditing, avoid modifying your user-defined contingencies. Instead, assign an end date to the existing contingency, and create a new contingency.

  3. In the General Information region, enter basic details about the contingency, such as name, effective dates, and description.

    Note: A contingency's last effective date controls only whether it can be defaulted to new order or invoice lines. An expired contingency on an order or invoice line remains valid, provided that it was valid on the day when originally defaulted.

  4. In the Related General Policy region, select the revenue policy that Receivables will review when considering whether this contingency is applicable:

    Your define your revenue policies on the Revenue Policy page. See: Defining Your Revenue Policy.

    Note: Receivables reviews the above details in conjunction with any defaulting rules that you define. See: Assigning Contingencies.

  5. In the Contingency Removal Event region, select the event that will remove the contingency from the invoice:

    You can define multiple contingencies that have the same removal event.

  6. Optionally enter removal event attributes and days that indicate the timeline for contingency removal. You can select these event attributes:

    For example, once 10 days have passed beyond an order's ship confirm date, you might want Receivables to automatically remove a customer acceptance contingency. (This is an example of implicit customer acceptance, as opposed to the Explicit Customer Acceptance contingency that Receivables predefines.)

    You can set this up as follows:

Assigning Contingencies

You can define defaulting rules for automatic contingency assignment.

Important: You must define defaulting rules to enable automatic contingency assignment. However, do not define defaulting rules to address revenue policy violations, because Receivables automatically assigns the appropriate revenue contingencies if any revenue policy is violated. See: Defining Your Revenue Policy.

For each rule that you define, you can specify one or more matching criteria. If the rule's stated criteria is matched, then Receivables assigns the contingency that you select.

For example, you might want to require Customer ABC to always manually accept an item before revenue on its transactions can be recognized. To enforce this scenario, create a new rule, select the revenue contingency that is the desired result (in this case, Explicit Acceptance), select Bill To Customer as the rule parameter, and enter the customer condition.

With this defaulting rule in place, Receivables will assign the Explicit Acceptance contingency to all Customer ABC's transaction lines, and revenue will be deferred until customer acceptance is manually recorded.

You can define multiple rules with different matching criteria that return the same contingency. And, you can define multiple rules with the same matching criteria that return multiple contingencies.

Rule parameters that you can use during rule definition include:

Note: You cannot assign contingencies to transaction lines that have deferred account rules.

Related Topics

Event-Based Revenue Management, Oracle Receivables User Guide

Evaluating Invoices for Event-Based Revenue Management, Oracle Receivables User Guide

Defining Your Revenue Policy

Use the Revenue Policy page to specify your enterprise revenue policies. The Revenue Management Engine uses the information that you enter in this page to make automatic revenue recognition decisions for your manually entered and imported invoices.

The Revenue Management Engine compares each invoice against the revenue policy information that you state here. Any deviations cause the assignment of revenue contingencies to the invoice or invoice line, which impact the timing of revenue recognition for those invoices. See: Event-Based Revenue Management, Oracle Receivables User Guide.

Note: Even if you do not specify anything in this page, Receivables can still automatically defer or recognize revenue for your invoices. If one or more revenue contingencies exist on a billing line, then Receivables enables collectibility analysis for that line, and bases revenue decisions on the contingency. See: Evaluating Invoices for Event-Based Revenue Management, Oracle Receivables User Guide.

Use the Revenue Policy page to enter information about:


To define your Receivables revenue policy system options:

  1. Navigate to the Revenue Policy page using the Revenue Management Super User responsibility.

  2. Select the operating unit that you want to define this revenue policy for.

  3. In the Credit Classifications region, select up to three credit classifications that identify your high risk, noncreditworthy customers.

  4. In the Standard Refund Policy field, enter the standard refund period that you typically extend to customers.

  5. In the Standard Payment Term field, enter the maximum time period before a payment term becomes extended.

Related Topics

Event-Based Revenue Management, Oracle Receivables User Guide

Defining Revenue Contingencies