Understanding Revenue Management

PeopleSoft Contracts enables you to capture revenue information for a contract and allocate that information to specific contract lines within the PeopleSoft Contracts system. You can associate revenue information with a revenue recognition method, manage when the conditions for recognizing revenue have been met, and generate journal entries to record revenue in your PeopleSoft General Ledger system.

You can actively manage accounting activity that is generated by PeopleSoft Contracts. You define accounting information (amounts and accounting distributions) within PeopleSoft Contracts at the individual contract line level. You then assign these contract lines to revenue plans. A revenue plan has one of four possible revenue recognition methods: apportionment, milestone, percent complete, and as-incurred. How you manage a revenue plan depends upon its revenue recognition method.

Managing revenue consists of managing the revenue plan and revenue plan events, and managing the contract line. Managing the revenue plan and revenue plan events is part of your normal contract management cycle and is not governed by amendment processing. Changes to your contract line are generally governed by amendment processing, with the exception of changes to the accounting distributions for a contract line.

When creating a contract you identify whether billing and revenue are managed separately or as one amount. If revenue and billing are managed separately on the contract, then the contract line level revenue amounts and revenue limits are entered separately from billing. If revenue and billing are not separated on the contract then contract line amounts and limits for revenue are read only and match billing. Under both selections (separating billing and revenue and not separating billing and revenue) revenue plans are assigned allowing for different timings for billing and revenue recognition. The difference being whether the contract line amounts and limits for revenue are separately identified from billing or match billing.

For more information see Defining General Contract Information

See Updating Billing and Revenue Separation Identifiers

When describing actions to manage revenue in PeopleSoft Contracts documentation, the reference is to actions after adding a contract, allocating prices to contract lines, and contract activation. Managing revenue includes setting up and readying your revenue plans and revenue plan events, and then managing these revenue plans and events to record revenue using the PeopleSoft Contracts revenue Application Engine processes.

This section discusses:

  • Managing accounting for revenue plans.

  • Managing the revenue process in PeopleSoft Contracts.

  • Placing a revenue plan on hold.

  • Managing revenue plan event statuses.

  • Changing accounting distributions for amount-based contract lines.

  • Changing accounting distributions for rate-based contract lines.

  • Allocating amounts and cancelling contract lines.

  • Changing revenue plan information.

Note: For contracts with a classification of Government, you can find additional revenue information in the Contracts for Government Contracting documentation.

Before you can begin to manage revenue, you need:

  • A contract with an Active processing status.

  • A contract line with an Active status assigned to a revenue plan with a Ready status.

Several revenue inquiry and management pages enable you to query on and manage accounting for revenue plans, revenue plan events, and projects that are assigned to revenue plans.

From the Review Revenue - Plans page, you can query all your contracts and review information, such as revenue plan status, the total revenue amount for a revenue plan, and the pending revenue amount for a revenue plan. From this page, you can:

  • Navigate to the Revenue Plan page to edit revenue plan events, place or remove a hold on a revenue plan, or cancel a revenue plan.

  • Navigate to the Fixed Amount Revenue History page to review the accounting transactions that have been processed for a fixed-fee revenue plan.

  • Reverse a plan.

  • Set the revenue plan status to Pending or Ready.

Detailed management pages enable you to query the revenue plan events and the projects or activities that are assigned to revenue plans. From these pages, you can review the status of individual events and the revenue already booked for these events. From these pages, you can:

  • Navigate to the Revenue Plan page to edit revenue plan events.

  • Reverse a revenue plan event on the Review Revenue - Events page.

  • Set revenue plan events to Pending or Ready status from the Review Revenue - Events page.

  • Initiate a redistribution of the revenue that has been booked for that revenue plan to date.

Additional revenue management pages enable you to reverse amount-based revenue for an entire contract (Contract Reversal page), to redistribute revenue that has been booked for an event (Redistribute Fixed Fee page) or for a project/activity (Redistribute As Incurred page), and to reconcile billing to revenue for rate-based contract lines (value-based and as-incurred billing plans).

You can view revenue that has been recognized to date and pending revenue recognition for any cross-section of your PeopleSoft Contracts system. This table lists the actions you might perform when managing revenue and the pages on which you perform each action:

Revenue Management Action

Revenue Recognition Method

Page Name

Put the entire revenue plan on hold to freeze revenue recognition for all events within that revenue plan.

All

Revenue Plan

Change a revenue plan event status to Ready to enable revenue recognition for that event.

All

Review Revenue - Events

Change the accounting distribution of an amount-based contract line for future revenue entries.

Apportionment

Milestone

Percent Complete

Accounting Distribution

Change the accounting distribution of a rate-based contract line for future revenue entries.

As-Incurred

Accounting Rules

Reverse revenue already recognized for a revenue plan.

Apportionment

Milestone

Percent Complete

Review Revenue - Plans

Reverse revenue already recognized for a revenue plan event.

Apportionment

Milestone

Note: For Percent Complete, enter a smaller total percent complete to calculate a negative incremental percent event.

Review Revenue - Events

Reverse amount-based revenue already recognized for an entire contract.

Apportionment

Milestone

Percent Complete

Contract Reversal

Change the accounting distribution for amount-based revenue already recognized (redistribute revenue).

Apportionment

Milestone

Percent Complete

Redistribute Fixed Fee

Change the accounting distribution for rate-based revenue already recognized (redistribute revenue).

As-Incurred

Redistribute As Incurred

Define or change event conditions, schedule, or amounts to be recognized for a specific event.

All

Revenue Plan

Reassign contract lines from one revenue plan to another revenue plan.

Apportionment

Milestone

Percent Complete

  • Reverse revenue recognized from the Review Revenue - Plans page (the revenue plan must be cancelled).

  • Unassign the contract line from its current revenue plan on the Assign Rev Rec Plan - Accounting Plan page.

  • Assign the contract line to a new revenue plan on the Assign Rev Rec Plan - Accounting Plan page.

Cancel a revenue plan.

All

Revenue Plan

The revenue management pages enable you to perform a search for all revenue plans that have been placed on hold. For all revenue recognition methods, access the Revenue Plan page to either place a revenue plan on or remove a revenue plan from a hold.

To expedite processing, you may set all revenue plan events to Ready upon creation of the events. You can then control the revenue recognition with the process's run control parameters or use the Hold feature on the plan itself.

Manage the revenue plan event status for all revenue recognition events from the Review Revenue - Events page. Set the status of individual events to Ready to enable revenue recognition processing for these events.

PeopleSoft Contracts enables you to modify the accounting distribution of a contract line for future revenue recognition that you book against the contract line. You do this on the Accounting Distribution page, which stores accounting distributions for fixed-amount contract lines. The Accounting Distribution page is effective-dated; when you run the Amount-based Revenue process for any contract lines included in the process, the process uses the current accounting distributions before the event accounting date being processed to create revenue entries. Thus, if the effective-dated accounting distributions are 01-01-01 and 03-01-01, and the revenue plan event has an accounting date of 02-15-01, then the system uses the accounting distribution effective 01-01-01. The Accounting Distribution page also stores contract liability and contract asset accounting information for the fixed-amount contract lines. To ensure that the accounting remains consistent for the entire revenue recognition and billing cycle, do not change the contract liability and contract asset accounting information after you have set the contract processing status to Active.

For rate-based contract lines (except those attached to billing plans with value-based billing methods), change the accounting distributions on the Accounting Rules page. The Accounting Rules page is not effective-dated. Therefore, any changes that you make affect the revenue and billing accounting entries for transactions without regard to the transaction date. To ensure that the accounting remains consistent for the entire revenue recognition and billing cycle, do not change the contract asset accounting information after you begin processing transactions.

Note: You can set up additional rules for a specific contract, project and activity, and project ChartField combination if you want to change accounting for a particular set of transactions.

Note: For rate-based contract lines tied to billing plans with value-based billing methods, set up your contract asset on the Accounting Distribution page.

You can increase or decrease amount-based contract line amounts, as well as cancel contract lines as part of the amendment process. When increasing or decreasing contract line amounts, you must choose whether to adjust billing and revenue retroactively or to adjust billing and revenue for future events only. You can adjust billing on the Amendment Billing Allocation page and revenue on the Amendment Revenue Allocation page. This page is editable when the contract separates revenue and billing. If the contract does not separate billing and revenue then amounts equal those used for billing and are not editable. When cancelling an amount-based contract line, you can select the Reverse Amounts on the Amendment Billing Allocation page. If you select the Reverse Amounts option, then you are indicating that you want to adjust billing and revenue retroactively for the cancelled contract lines. If you do not select the Reverse Billing and Revenue option, then for cancelled contract lines, the system adjusts billing and revenue for future events only.

The system stores all accounting information (events, schedules, and percentages to be recognized per event) in the revenue plan. You can change the revenue plan only on the Revenue Plan page. This table lists the changes that you can make, which depend on the status of the revenue plan:

Revenue Plan Status

Changes

Pending

The first stage for the revenue plan. You can make any changes.

Ready

The system has validated all components of the plan, and most fields are unavailable for entry. However, you can reset the status to Pending and make changes.

In progress

One or more events has processed (a portion of revenue has been recognized). All fields are unavailable for entry. You cannot change any events that are In Progress or Completed. You can modify Pending, and Ready events, and you can add events.

Completed

All events, if they exist, have been completed (all revenue has been recognized). You cannot make any changes. You can only reverse the revenue of the plan, which sets the status to Reversed.

Cancelled

Cancellation may occur due to the entire contract being terminated or superseded, a contract line being dropped, or to consolidate contract lines onto another revenue plan. Once cancelled, a revenue plan cannot be reopened.

Action Required

A contract line amendment has been processed or an event reversed. The system set the revenue plan status to Action Required. You can edit all Pending and Ready events and add new events. Once you have reviewed the revenue plan and made any necessary changes, the system continues with revenue processing and changes the revenue plan status back to In Progress.

Reversal In Progress

When you initiate the reversal of a revenue plan, the system changes the status of the revenue plan to Reversal In Progress.

Reversed

This status indicates that you have reversed the revenue plan and that all processing has occurred.