Understanding Revenue Estimate Processing

This topic discusses:

Revenue estimate processing.
The Revenue Estimate Application Engine process (AR_REV_EST).
Special condition handling during the Revenue Estimate process.

The role of PeopleSoft Receivables in the commitment control process is to create source transactions for the revenue entries in the control budgets. A budget in PeopleSoft Receivables is a fixed income allocation (that is, a revenue estimate) with two monetary buckets: a recognized revenue bucket and a collected revenue bucket. Recognized revenue is revenue that has been billed to the customer but for which payment has not yet been received. It is open receivables. Collected revenue is cash that has been received as payment. The combined amounts should eventually match the total estimated amount, which is your budget.

Most receivable functions that you perform update one of the two revenue buckets. In some cases, they update both. This diagram demonstrates that the functions create a debit memo, a credit memo, ITEM match items, a write-off credit item, a write-off debit item, an earned discount, and an unearned discount, all of which update the recognized revenue bucket. Direct journal entries, match cash items, and item payments update the collected revenue bucket.

Recognized and collected revenue bucket updates by Receivables functions

You run the following processes to update the control budgets:

The Revenue Estimate process, which creates the source transactions for the control budget ledger for all activity except direct journals.
The Budget Processor Application Engine process (FS_BP), which updates the revenue buckets and creates the commitment control budget lines.

The Receivables Update Application Engine process (ARUPDATE) automatically runs the Revenue Estimate process and Budget Processor when it completes if you enabled commitment control for PeopleSoft Receivables. If you have errors in the source transaction or budget checking errors, then you must run the Budget Processor after you correct the errors. If you choose to delete the activity's source transactions, then you must rerun the Revenue Estimate process before you run the Budget Processor again. You only need to rerun these processes if you have corrected errors.

Note: The Revenue Estimate process does not change the distribution of PeopleSoft Receivables accounting entries in PeopleSoft General Ledger. If you enabled commitment control for PeopleSoft Receivables and for the general ledger business unit associated with the receivables business unit, then you must budget check the entries before you distribute them to PeopleSoft General Ledger.

The Revenue Estimate process uses the revenue accounting lines in the Item Distribution (PS_ITEM_DST) table to generate the source transactions for the control budget ledger. It generates one source transaction for each revenue line. If the activity does not generate a revenue line, the Revenue Estimate process searches the preceding activity for a revenue account and follows these rules:

If the activity is a Create a Debit Memo (IT-01), Create a Credit Memo (IT-02), or Create an Overdue Charge (FC-01) activity, the process uses the revenue account for that activity.
If it cannot find a revenue account, then the transaction causes an error. Enter the revenue account manually on the Revenue Estimate Correction page.
If the activity is a Transfer Item to Customer (TR-02) activity and the item was transferred to a customer in the same business unit, the process uses the revenue account of the from item.
If the item is system-generated (for example, an underpayment or an overpayment), then no revenue account exists and the process does not generate a source transaction.
When you create the write-off for an underpayment or overpayment, the system updates the revenue buckets.

This section describes how the Revenue Estimate process generates source transactions for these special conditions:

Overpayments.
Underpayments.
Prepayments.
Draft processing.
Write-offs on maintenance worksheets and in automatic maintenance.
Source transactions for PeopleSoft Billing and PeopleSoft Contracts items.
Directly journaled payments.
Realized gains and losses.
Unpost groups.
Items with value-added tax (VAT).
Multiple revenue lines.

Overpayments

If you have an overpayment (MT-05, WS-04, WS-05, or WS-06 item activities) and you leave the cash or credit on-account, the process does not create source transactions for the overpayment amount. When you apply the remaining cash or credit to an item, it updates the collected revenue bucket. However, if you write off an overpayment, the process updates both the recognized and collected revenue buckets.

Here is an example of revenue estimate entries for on-account overpayments:

Transaction	Recognized	Collected
Original 100.00 item	–100.00
110.00 payment		–100.00

Here is an example of revenue estimate entries for writing off an overpayment:

Transaction	Recognized	Collected
Original 100.00 item	–100.00
110.00 payment		–100.00
Write-off of 10.00	–10.00	–10.00

Note: You cannot combine cash and a credit memo when you create an overpayment. If you have an overpayment, the entire amount should come from cash or the entire amount should come from a credit memo. This is necessary because the system updates the buckets differently depending on whether the overpayment is from cash or a credit memo. If you combine them, it cannot determine how to update the buckets.

Underpayments

If you have an underpayment and you pay off the item and create an adjustment item, the process updates the collected revenue bucket with the full item amount at that time. When you pay for the adjustment of the item, the system does not create any further source transactions.

Here is an example of revenue estimate entries for an underpayment with an adjustment:

Transaction	Recognized	Collected
Original 100.00 item	–100.00
90.00 payment and 10.00 adjustment		–100.00
Apply 10.00 payment to the adjustment	No entries

When you have an underpayment and you write off the remainder of the item, the process creates one source transaction that updates the collected revenue bucket for the amount of the payment. It also creates another source transaction that debits the recognized bucket for the write-off.

Here is an example of revenue estimate entries for an underpayment and a write off:

Transaction	Recognized	Collected
Original 100.00 item	–100.00
90.00 payment		–90.00
10.00 write-off item	10.00

Prepayments

When you create the prepayment item (WS-04), the Revenue Estimate process does not create source transactions for the control budget. When you create the IT-01 item for the prepayment, the Revenue Estimate process generates the source transactions that update both the collected and the recognized bucket. It uses the accounts from the new item to create the entries.

Here is an example of revenue estimate entries for a prepayment:

Transaction	Recognized	Collected
100.00 Prepayment (WS-04)
100.00 Item (IT-01)	–100.00	–100.00

If you create prepayments using the draft worksheet, the process is the same except that it does not create the source transactions when you create the IT-01 item if the cash for the draft has not been recognized yet. When the cash is recognized at the discount date or at the due date, the process looks to see if an IT-01 item already exists for the prepayment and generates the source transactions. If you void, dishonor, or cancel the remittance for a draft with prepayments, the process reverses transactions only if the prepayment was already applied to an item.

Draft Processing

When the process creates source transactions for the Pay an Item (DM-01), Write-off an Overpayment (DM-08), and Write-off an Underpayment (DM-09) activities on the draft worksheet, it places them in two holding tables (PS_ARCC_HLDTRN_HDR and PS_ARCC_HLDTRN_TBL) until the cash is recognized for the draft. When the cash is recognized either at the discount date or at the due date, it moves the source transactions from the holding tables to the application tables (PS_AR_CC_TRAN_HDR and PS_AR_CC_TRAN_TBL) that hold the source transactions for budget processing.

The process also uses the holding tables when you void or dishonor a draft or when you cancel a draft remittance.

Write-offs on Maintenance Worksheets and in Automatic Maintenance

If you write off an item on a maintenance worksheet or if the Automatic Maintenance Application Engine process (AR_AUTOMNT) writes off an item, the system uses the reason for the write-off item to determine which bucket to update. You define which buckets to update in the automatic entry type for the write-off system functions for maintenance groups.

Source Transactions for PeopleSoft Billing and PeopleSoft Contracts Items

If you enter your invoices (IT-01 or IT-02 items) in PeopleSoft Billing, PeopleSoft Receivables creates the source transactions for them in the recognized revenue bucket as long as PeopleSoft Receivables generates the accounting entries. When PeopleSoft Billing creates the accounting entries, PeopleSoft Receivables does not create the source transactions to update the recognized bucket. You must create the source transactions in PeopleSoft Billing.

If PeopleSoft Billing is creating the accounting entries, to enable PeopleSoft Receivables to process payments against items coming from PeopleSoft Billing or PeopleSoft Contracts/Projects, you must run the Load GL Accounting Entries process (BILDGL01) in PeopleSoft Billing, which performs budget checking. If the invoice is not budget checked prior to coming into PeopleSoft Receivables, then PeopleSoft Receivables issues an error message on the payment worksheet indicating that the item has not successfully passed budget checking.

When you a apply payment to an item interfaced from PeopleSoft Billing that has been budget checked, the Revenue Estimate process uses the revenue lines in the PeopleSoft Billing accounting entry table (PS_BI_ACCT_ENTRY) to generate the source transactions for the collected bucket.

When an invoice comes from PeopleSoft Contracts/Projects and PeopleSoft Contracts manages the revenue, even if the invoice was budget checked successfully, if you did not run the Load GL process in Billing then the PeopleSoft Receivables Revenue Estimate process will skip the transaction when processing a payment.

When an item has an associated contract line in PeopleSoft Contracts, then the Revenue Estimate process uses the revenue lines that reside on the PeopleSoft Contracts accounting line tables. PeopleSoft General Ledger updates and budget checks the recognized revenue lines for the budget when you post the PeopleSoft Contracts journals in PeopleSoft General Ledger. The process looks for the revenue lines in these tables to populate the revenue collected bucket:

Contracts Accounting Line Projects table (PS_CA_ACCTG_LN_PC), which contains the revenue lines for rate-based contracts.
Contracts Accounting Line table (PS_CA_ACCTG_LINE), which contains the revenue lines for amount based contracts.
The process uses the most recent revenue entry that was posted for the contract line in the Contracts Accounting Line table (PS_CA_ACCTG_LINE). You should use the same revenue distribution lines for amount-based contracts throughout the life of the contract. At least one revenue event must be posted in PeopleSoft Contracts before you apply the first payment to the item associated with the contract line. If there are no posted revenue lines for the contract line, the process does not update the collected revenue bucket and the process generates an error message.

If you receive an error, you should post some revenue lines for the contract line in PeopleSoft Contracts and then rerun the Revenue Estimate process.

Directly Journaled Payments

When you journal a payment directly to the general ledger, the system uses the information in the PS_PAY_MISC_DST table to update the recognized and collected buckets. No source transactions for direct journals will appear in the revenue estimate tables: PS_AR_CC_TRAN_HDR and PS_AR_CC_TRAN_TBL. Therefore, you do not need to run the Revenue Estimate process for directly journaled payments.

Realized Gains and Losses

If you apply a payment to an item in a foreign currency and either a realized gain or loss exists, then the process creates an additional transaction to adjust the amount in the collected bucket.

Here is an example of revenue estimate entries for a transaction with realized gain or loss:

Transaction	Recognized	Collected
Original Item	–100.00
Payment		–100.00
Realized Gain or Loss		2.00

Unpost Groups

When you unpost a group, the Revenue Estimate process creates source transactions to reverse the original entries in the revenue budget.

Items with VAT

If an item contains a VAT amount or sales tax, only the base amount of the transaction updates the revenue buckets. For example, if the total item is 108.00 EUR and the VAT amount is 8.00 EUR, then the process updates the revenue budgets with 100.00 EUR.

Multiple Revenue Lines

If an item has multiple revenue lines and it is completely paid by one payment, the system uses the same amounts for each revenue account as the original revenue lines.

If an item has multiple revenue lines and you make a partial payment, the system provides a page in the worksheet components where you can specify how to distribute the revenue amount. This page is available only if you selected Allow Manual Distribution in the Multiple Revenue Line field for the business unit. If you do not enable manual distribution, the system automatically prorates the payment amount across the remaining revenue balances.