Total Contract Price for Billing and Total Contract Price for Revenue

Once you define the contract and add products to the contract, the next step is to identify the total contract price for billing and revenue. The Billing Allocation page is used to identify the total contract price for billing and the Revenue Allocation page is used to identify the total contract price for revenue. Total Billing and Total Revenue should be net of any discounts/surcharges applied.

The Billing Allocation page should always be updated. Once you identify the total contract price for billing the next step is to allocate that price to the contract lines. The allocation (or identification) of billing values to the contract line is based on the terms agreed to with the customer. Some contracts will have amount based lines, some will have rate based lines and others will have both amount and rate based lines.

The Revenue Allocation page is either updated by the user or programmatically updated to match values used for billing depending on whether the contract separates billing and revenue. If billing and revenue are managed together as one value, without separating billing and revenue, then amounts entered on the Billing Allocation page will programmatically update the Revenue Allocation page and the page is read only. Alternatively, you may enter separate prices and limits for revenue if the contract was identified as having separate billing and revenue when it was created. The distinction to separate billing and revenue on the contract is made based on the contract line’s price type (amount or as incurred). Amount based lines manage billing and revenue separately if the Separate Fixed Billing and Revenue check box is selected on the contract. Similarly, as-incurred or rate based lines manage billing and revenue separately if the Separate As Incurred Billing and Revenue check box is selected on the contract. If neither fixed nor as incurred contract lines manage billing and revenue separately, then the Revenue Allocation page is completely read only and matches values used for billing. If the contract does manage billing and revenue separately, then Total Revenue on the Revenue Allocation page should be updated by the user in addition to maintaining the line level prices and limits for revenue for those contract lines where separate billing and revenue is allowed.

Note:

For better understanding, the sections below are described from the perspective of having revenue managed separately from billing on the contract. If billing and revenue are not managed separately, the system sets the amounts for revenue to match billing and they are read only.