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 - Contract Asset process (BIACCRUE). The Contract Asset 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 Contract Asset 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 auto-reversing 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 - Contract Asset 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 - Contract Asset process.
Review these examples to help you understand the revenue accrual process for uninvoiced activity.
Example 1
Accounting periods
Term |
Definition |
|---|---|
Period One |
January 1 to January 31. |
Period Two |
February 1 to February 28. |
Period Three |
March 1 to March 31. |
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.
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 Contract Asset 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: Contract Asset.
Accounting Date
Account
Debit
Credit
1/31/02
Contract Asset
1,000
1/31/02
Revenue
1,000
Process Run: Journal Generator.
Accounting Date
Account
Debit
Credit
2/1/02
Contract Asset
1,000
2/1/02
Revenue
1,000
In February, the amount on the bill for that line changes to 1,200 USD. When you run the Contract Asset 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: Contract Asset.
Accounting Date
Account
Debit
Credit
2/28/02
Contract Asset
1,200
2/28/02
Revenue
1,200
Process Run: Journal Generator.
Accounting Date
Account
Debit
Credit
2/28/02
Contract Asset
1,200
2/28/02
Revenue
1,200
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 Contract Asset 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:
Term |
Definition |
|---|---|
Period One |
January 1 to January 31. |
Period Two |
February 1 to February 28. |
You invoice a bill in February for January's activity. However, you want to recognize revenue in January before invoicing.
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 Contract Asset 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: Contract Asset.
Accounting Date
Account
Debit
Credit
1/16/02
Contract Asset.
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
Contract Asset.
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
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 Contract Asset 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: Contract Asset.
Accounting Date
Account
Debit
Credit
1/30/02
Contract Asset.
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
Contract Asset.
8,000
2/1/02
Revenue account 3.
2,000
2/1/02
Revenue account 4.
6,000
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 Contract Liability
Accounting periods:
Term |
Definition |
|---|---|
Period One |
January 1 to January 31. |
Period Two |
February 1 to February 28. |
Period Three |
March 1 to March 31. |
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.
The bill at that time consists of one line of activity (1,200 USD) and is set up to recognize contract liability based on a from date and to date range of January 1 through March 31. Run the Contract Asset 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: Contract Asset.
Accounting Date
Account
Debit
Credit
1/31/02
Contract Asset
400
1/31/02
Revenue
400
Process Run: Journal Generator
Accounting Date
Account
Debit
Credit
2/1/02
Contract Asset
400
2/1/02
Revenue
400
After the bill is invoiced, run the regular Load GL process to create accounting entries for regular revenue and contract liability.
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
Contract Liability
400
3/1/02
Contract Liability
400
3/1/02
Revenue
400
Note: InterUnit billing is not supported in the Contract Asset process.
The following are platform-specific statements that are used in the Load GL - Contract Asset process.
Term |
Definition |
|---|---|
ADDDTTM |
Platform-specific DTTM compare. |
DFR_DT |
Update range beginning and end dates. |
INPERIOD |
Calculate days in period. |
INSGLAR |
Insert AR (accounts receivable) rows in accounting entries. |
ROUND |
Rounding function. |
INSREVS |
Insert revenue rows in accounting entries for ChartField balancing and Inter/IntraUnit processing. |
INSDSS |
Insert discount and surcharge revenue rows in accounting entries for ChartField balancing and Inter/IntraUnit processing. |