Using Unbilled Revenue Accrual

This chapter provides an overview of the unbilled revenue accrual process and discusses how to:

• Set up unbilled revenue accrual.

• Generate unbilled revenue accrual accounting entries.

Understanding the Unbilled Revenue Accrual Process

To create accounting entries for unbilled revenue that you want to accrue within the current accounting period, use the Load GL - Unbilled Revenue Accrual process (BIACCRUE). The Unbilled Revenue Accrual process enables you to create accounting entries to accrue revenue for uninvoiced activity. Use this process, for example, to send revenue activity to the general ledger weekly when invoices are created monthly.

You must have PeopleSoft GL Journal Edit/Post feature enabled to utilize the Unbilled Revenue Accrual process.

You must still run the Journal Generator process to post these accounting entries to the general ledger. You must also run the regular Load GL process after the bill is invoiced to create accounting entries for revenue recognition and accounts receivable offset. Run the Journal Generator process again to post these entries to the general ledger.

To prevent double booking of revenues, associate the accounting entries for unbilled activity to an autoreversing Journal Generator template. This template automatically reverses accrual entries at the beginning or at the end of the accounting period following an accrual.

The Load GL - Unbilled Revenue Accrual process:

• Determines the default unbilled account receivables.

• Refreshes the ChartField values for distribution ID codes within the set of invoices.

• Calculates deferred amounts for the current accounting period.

• Performs currency conversion.

• Performs ChartField balancing and combination editing of balanced entries that are generated.

• Inserts accounting entries into the BI_ACCT_ENTRY table for accrued bills.

Note. At this time, PeopleSoft Billing does not support unbilled revenue accrual processing for InterUnit bills.

This section provides:

• Examples of unbilled revenue accrual.

• Platform-specific statements in the Load GL - Unbilled Revenue Accrual process.

Examples of Unbilled Revenue Accrual

Review these examples to help you understand the revenue accrual process for uninvoiced activity.

Example 1

Accounting periods

You invoice a bill at the end of March for three months of activity. However, you want to recognize unbilled revenue activity monthly at the end of each accounting period.

1. At the start of accounting period one, the bill consists of one line of activity (1,000 USD). On January 1, when you run the Unbilled Revenue Accrual process, it picks up the revenue of 1,000 USD. The Journal Generator posts the entry to the current accounting period. The Journal Generator also automatically creates reversing journal entries for the next accounting period (period two).

   Processing date: 1/31/02.

   Process Run: Unbilled Revenue Accrual.

   Accounting Date	Account	Debit	Credit
   1/31/02	Unbilled AR	1,000
   1/31/02	Revenue		1,000

   Process Run: Journal Generator.

   Accounting Date	Account	Debit	Credit
   2/1/02	Unbilled AR		1,000
   2/1/02	Revenue	1,000

2. In February, the amount on the bill for that line changes to 1,200 USD. When you run the Unbilled Revenue Accrual process on February 28, it creates the accounting entries to recognize the new line amount. Again, when the Journal Generator posts these entries, it also creates reversing journal entries for the next accounting period (period three).

   Processing date: 2/28/02.

   (Original bill is still in the system; it is not invoiced until 3/30. Revenue amount changes to 1,200 USD).

   Process Run: Unbilled Revenue Accrual.

   Accounting Date	Account	Debit	Credit
   2/28/02	Unbilled AR	1,200
   2/28/02	Revenue		1,200

   Process Run: Journal Generator.

   Accounting Date	Account	Debit	Credit
   2/28/02	Unbilled AR		1,200
   2/28/02	Revenue	1,200

3. In March, the amount of the line changes to 1,400 USD, just before the bill is invoiced. When the Load GL process runs on March 30, it creates the usual debit and credit accounting entries that reflect the amounts that are on the invoiced bill.

   Processing date: 3/30/02.

   Process Run: Load GL.

   Accounting Date	Account	Debit	Credit
   3/30/02	AR	1,400
   3/30/02	Revenue		1,400

Note. The Unbilled Revenue Accrual process creates accounting entries for eligible bill lines that it has not previously accrued. If the process finds lines that accrued in a previous accounting period, it creates new accounting entries for those lines in the current accounting period.

Note. A warning message will be displayed if the user tries to delete a line that has been already accrued. Accrued lines that are deleted will be reversed only in the next period.

Example 2

Accounting periods:

You invoice a bill in February for January's activity. However, you want to recognize revenue in January before invoicing.

1. At the time of revenue accrual processing on January 16, the bill consists of two revenue lines (4,000 USD and 9,000 USD) and a discount expense line of 1,000 USD. The Unbilled Revenue Accrual process creates accounting entries for these three lines of activity. The Journal Generator, which you run next, posts these entries to the current accounting period. It also automatically generates reversing journal entries, which it books in the next accounting period (period two).

   Processing date: 1/16/02.

   Process Run: Unbilled Revenue Accrual.

   Accounting Date	Account	Debit	Credit
   1/16/02	Unbilled AR.	12,000
   1/16/02	Discount expense.	1,000
   1/16/02	Revenue account 1.		4,000
   1/16/02	Revenue account 2.		9,000

   Process Run: Journal Generator.

   Accounting Date	Account	Debit	Credit
   2/1/02	Unbilled AR.		12,000
   2/1/02	Discount Expense.		1,000
   2/1/02	Revenue account 1.	4,000
   2/1/02	Revenue account 2.	9,000

2. On January 30, before the end of the monthly accounting period, two more lines of revenue activity are added (2,000 USD and 6,000 USD) to the bill. If you run the Unbilled Revenue Accrual process at this time, only these two new lines are selected for accrual. Run the Journal Generator to post these entries to the current accounting period and to automatically generate reversing journal entries to book in the next accounting period (period two).

   Processing date: 1/30/02.

   Process Run: Unbilled Revenue Accrual.

   Accounting Date	Account	Debit	Credit
   1/30/02	Unbilled AR.	8,000
   1/30/02	Revenue account 3.		2,000
   1/30/02	Revenue account 4.		6,000

   Process Run: Journal Generator

   Accounting Date	Account	Debit	Credit
   2/1/02	Unbilled AR.		8,000
   2/1/02	Revenue account 3.	2,000
   2/1/02	Revenue account 4.	6,000

3. On February 1, before invoicing the bill, a correction is made to reduce the discount amount to 500 USD. After invoicing the bill, the Load GL process creates the usual debit and credit accounting entries that reflect the amounts that are on the invoiced bill. The new total amount of 20,500 USD (all five revenue lines minus the new discount amount) appears on the invoice.

   Processing date: 2/1/02.

   Process Run: Load GL.

   Accounting Date	Account	Debit	Credit
   2/1/02	AR.	20,500
   2/1/02	Discount expense.	500
   2/1/02	Revenue Account 1.		4,000
   2/1/02	Revenue Account 2.		9,000
   2/1/02	Revenue Account 3.		2,000
   2/1/02	Revenue Account 4.		6,000

You normally do not accrue and invoice a bill in the same accounting period. However, measures exist to prevent double-booking entries. When you invoice a bill, the Load GL process finds the same lines that you accrued in the current accounting period and creates reversal entries for the current accounting period. These offsetting entries are reversed in the next accounting period.

Example 3: Accrual for Deferred Revenue

Accounting periods:

In this example, the customer's billing cycle lands in the next accounting period, where the invoice date is February 15. However, you want to recognize revenue on the bill for all of January's activity in the current accounting period.

1. The bill at that time consists of one line of activity (1,200 USD) and is set up to recognize deferred revenue based on a from date and to date range of January 1 through March 31. Run the Unbilled Revenue Accrual process monthly, at the end of each accounting period. Run the Journal Generator process to post these entries to the current accounting period and to automatically create the reversing journal entries in the next accounting period.

   Processing date: 1/31/02.

   (You want to recognize the January portion of the bill, even though the bill is not invoiced until February).

   Process Run: Unbilled Revenue Accrual.

   Accounting Date	Account	Debit	Credit
   1/31/02	Unbilled AR	400
   1/31/02	Revenue		400

   Process Run: Journal Generator

   Accounting Date	Account	Debit	Credit
   2/1/02	Unbilled AR		400
   2/1/02	Revenue	400

2. After the bill is invoiced, run the regular Load GL process to create accounting entries for regular revenue and deferred revenue.

   Processing date: 2/15/02.

   Process Run: Load GL.

   Accounting Date	Account	Debit	Credit
   2/15/02	AR	1,200
   2/15/02	Revenue		800
   2/15/02	Deferred Revenue		400
   3/1/02	Deferred Revenue	400
   3/1/02	Revenue		400

Note. InterUnit billing is not supported in the Unbilled Revenue Accrual process.

Platform-Specific Statements in the Load GL - Unbilled Revenue Accrual Process

The following are platform-specific statements that are used in the Load GL - Unbilled Revenue Accrual process.

Setting Up Unbilled Revenue Accrual

There are three mandatory steps for enabling the Unbilled Revenue Accrual process. A fourth optional step provides a means of setting up defaults for this feature:

• Define a Journal Generator Template for accrued unbilled revenue.

• Create an accrued AR (accounts receivable) distribution code.

• Set up unbilled revenue accrual options for the billing business unit.

• (Optional) Set up unbilled revenue accrual defaults.

See Also

Establishing PeopleSoft Billing Business Units

Entering Bills Online

Defining Bill Types

Setting Up Distribution Codes

Defining a Journal Generator Template for Unbilled Revenue Accrual

In addition to establishing a regular Journal Generator template for regular revenue, set up a Journal Generator template that automatically reverses accrual entries at the beginning or at the end of the next accounting period. Use this additional template solely for posting accrued revenue accounting entries. The system keeps track of when you actually invoiced the customer and prevents double booking of revenues in the same accounting period.

Use the Journal Generator Template page to set up an autoreversing Journal Generator template. For the unbilled revenue accrual template, select as the reversal code Beginning of Period or End of Next Period.

See Also

Setting Up for Journal Generator

Creating an Unbilled AR Distribution Code

Access the Distribution Code page (Set Up Financials/Supply Chain, Common Definitions, Distribution Accounting, Distribution Code) to create an unbilled accounts receivable (AR) distribution code. In the Distribution Type field, select Unbill AR.

Setting Up Unbilled Revenue Accrual Options for the Billing Business Unit

Access the Billing Definition - Business Unit 3 page (Set Up Financials/Supply Chain, Business Unit Related, Billing, Billing Definition, Business Unit 3).

To enable unbilled revenue accrual processing in the system for the corresponding business unit:

1. Select Enable Unbilled Rev Accrual (enable unbilled revenue accrual) in the Unbilled Rev Accrual Options (unbilled revenue accrual options) group box.

   When you select this option, define a default Unbilled AR Distribution Code and an Accrued Journal Template. Only those journal templates that are set up to autoreverse are available for selection.

2. Define which bill statuses to include in the accrual.

   You can define multiple statuses, inserting a row for each additional status. The following statuses are eligible for accrual: Finalized, Hold, New Bill, Pend Approv (pending approval), and Ready.

3. Select Accrue Bills at This Level to accrue bills by business unit.

   To enable unbilled revenue accrual at the business unit level (but only for certain bill types), do not select Accrue Bills at This Level. Access the Bill Type 3 page for additional setup.

Setting Up Unbilled Revenue Accrual Defaults

Define the Unbilled AR Distribution Code (or offset account) on the Distribution Code page and Bill Type 3 page. This value is not stored on the bill, but the Unbilled Revenue Accrual process needs this distribution code to run successfully. The Unbilled AR Distribution Code field default hierarchy is:

1. Distribution Code page.

2. Bill Type 3 page.

3. Billing Definition - Business Unit 3 page (where the field is required).

Setting Up Unbilled Revenue Accrual Defaults on the Distribution Code Page

If you have several AR accounts and you want to use a separate unbilled AR account for each (in effect, pairing each AR account with its own unbilled AR account), use the Distribution Code page to define these relationships.

To define pairs of AR accounts and unbilled AR accounts:

1. Select AR as the distribution code search parameter, and match each of the AR distribution codes to its own unbilled AR distribution code.

   The distribution type of AR denotes an AR type of account distribution.

2. In the Unbilled AR Distribution Code field, enter the distribution code for the unbilled ChartField values that you establish during the initial setup for the unbilled revenue accrual process.

   If you do not want to pair each AR account with its own unbilled AR account, leave this field blank, and define the Unbilled AR Distribution Code on the Bill Type 3 page.

Setting Up Unbilled Revenue Accrual Defaults on the Bill Type 3 Page

To set up the Unbilled Revenue Accrual process at the bill type level:

1. Select Accrue Bills of This Level to enable unbilled revenue accrual of bills at the bill type level.

2. Enter an unbilled AR distribution code to use different unbilled AR distribution codes for different bill types.

   If you define an unbilled AR distribution code on the Distribution Code page, the system uses that value. If you leave that field blank, the system uses the unbilled AR distribution code that you establish here at the bill type level. If you do not establish an unbilled AR distribution code here, the system uses the one that you establish at the business unit level where it is required.

Setting Up Unbilled Revenue Accrual Defaults on the Standard Billing - Header - Info 2 Page

Use this page to accrue unbilled revenue for individual invoices. If you selected the Accrue Bills at This Level field at the bill type or the business unit levels, that information appears by default on this page, and the Accrue Unbilled option is selected. If not, select it here. For this bill to be eligible for accrual, this flag must be selected.

Generating Unbilled Revenue Accrual Accounting Entries

The Load GL - Unbilled Revenue Accrual process (BIACCRUE) generates accounting entries for accruing revenue for unbilled invoices.

This section discusses how to:

• Run the Load GL - Unbilled Revenue Accrual process.

• Review bill lines that fail to accrue.

Pages Used to Generate Unbilled Revenue Accrual Accounting Entries

Running the Load GL - Unbilled Revenue Accrual Process

Access the Accrue Unbilled Revenue page (Billing, Generate Invoices, Accrue Unbilled Activity, Non-Consolidated Bills, Load GL - Unbilled, Accrue Unbilled Revenue). To generate unbilled revenue accrual accounting entries for consolidated bills, access the Consol Accrue Unbilled Revenue process page (Billing, Generate Invoices, Accrue Unbilled Activity, Consolidated Bills, Consol Load GL - Unbilled, Accrue Unbilled Revenue).

Reviewing Bill Lines that Fail to Accrue

Access the Lines Not Ready to Accrue Rpt page (Billing, Generate Invoices, Accrue Unbilled Activity, Lines Not Ready to Accrue Rpt).

Note. If a bill does not accrue because of all three reasons in the previous three field descriptions, the report lists that bill three times.

See Also

Entering Bills Online