Rate-Based Pricing
Before you can bill or recognize revenue for rate-based contract lines, you must first define your rate and fee structure through rate sets and rate plans and associate those rate sets and rate plans to your rate-based contract lines. This enables the system to generate appropriate billing and revenue transactions for analysis and processing. In addition, billing limits and revenue limits can be assigned to the contract line.
Rate based contract lines are priced using both PeopleSoft Contracts and PeopleSoft Project Costing. Use the Billing Allocation page and Revenue Allocation page in Contracts to establish a limit for billing and a limit for revenue. The limit for billing and limit for revenue are managed separately if the contract separates as incurred billing and revenue. If not separated, then the revenue limit will match the billing limit. Billing limits and revenue limits are included in the total contract price for billing and total contract price for revenue. Similar to amount based lines, rate based lines can receive a portion of the total revenue using its revenue price as the basis for allocation. When using the automated allocation functionality, the revenue limit is updated with the line’s allocation of total revenue.
Use PeopleSoft Project Costing to create simple or detailed rate sets and rate plans that identify rates per hour/quantity or markups on cost. Other standard methods of calculating billing and revenue on costs or hours incurred in project costing or on other inputs interfaced into the project costing tables are also available. Rates and markups can be defined separately for revenue and assigned to contracts that opt to Separate As Incurred Billing and Revenue. Once defined, you assign the rate set or rate plan to the rate based contract line using the Related Projects page. Rate sets and rate plans can be defined for general use or for a specific contract. Tiered pricing is available for use on rate based contract lines and defined on the Related Projects page. The Related Projects page is also used to apply discounts, retainages and lower level transaction based limits for a contract line. Projects and Activities are assigned to a contract line on the Related Projects page. Transactions recorded to these project and activities are integrated into project costing and priced using the rate sets and rate plans assigned to the line. Amounts sent to Billing and amounts sent to General Ledger for revenue are limited to the billing limits and revenue limits entered on the contract.
Click to watch a short video about Separating Billing from Revenue in Contracts (Step 1) and Separating Billing from Revenue in Contracts (Step 2).