2Manage Revenue Management

This chapter contains the following:

Manage Customer Contracts

A customer contract is an agreement between two or more parties that creates enforceable rights and obligations. The contract may exist in the form of a paper document signed by both parties or it can be a contract that's agreed to orally by both parties.

The Accounting Standards Codification (ASC) standard ASC 606 and the International Financial Reporting Standards (IFRS) standard IFRS 15:

  • Define an eligible contract very specifically. See IFRS 15, paragraphs 9 though 16, or ASC 606, paragraphs 625-10-25-1 through 625-10-25-8 for details.

  • Require that in certain circumstances, you must combine contracts. See IFRS 15, paragraph 17 or ASC 606, paragraph 625-10-25-9.

  • Require that you review the transaction at inception and identify your promises to the customer as performance obligations, using the criteria of distinctness. See IFRS 15, paragraph 22, and ASC 606, paragraph 625-10-25-14.

  • Require you to determine at inception whether revenue can be recognized either over time (limited to three circumstances) or at a point in time (all other circumstances). See IFRS 15, paragraph 32 and ASC 606, paragraph 625-10-25-24.

Identify Contracts in Revenue Management

In Oracle Fusion Revenue Management, customer contracts are made up of a series of source lines. These sources lines represent different portions of the contract.

For example, if a customer signs a contract to supply computer hardware and also to provide technical support for one year from the date of installation, then the portion of the contract related to the supply of computer hardware is captured as a sales order and the portion of the contract related to technical support is captured as a service contract.

The individual documents are extracted from these applications at different points of time and are interfaced with Revenue Management as source documents. In Revenue Management, these documents are identified as belonging to one customer contract. The Customer Contract document is created with lines of these documents.

To combine multiple source document lines into a single customer contract automatically, there must be a common link between these documents. This common link can be:

  • An identifier that's captured on all the source documents or source document lines, for example, a customer's purchase order number.

  • A specific time period. In other words, all source document lines were created for a customer within a short span of time.

    For example, multiple source document lines created for the same customer within 30 days should form part of one accounting contract for revenue recognition purposes.

A single invoice can, from a revenue recognition standpoint, represent the following three scenarios:

  • All of the items in the invoice were purchased independently and the invoice must be split into ten customer contracts.

  • All of the items were purchased as one bundle and the entire invoice is identified as one customer contract.

  • Some of the items in the invoice are related, and the invoice must be split into multiple contracts with related items added to one contract.

    In this case, the invoice will result in more than one, but fewer than eleven customer contracts.

An organization can also enter into multiple independent customer contracts with the same customer that are fulfilled simultaneously over a period of time. A customer contract can be represented in the upstream applications as source documents in many ways:

  • One accounting contract is represented as one source document.

  • One accounting contract is represented as multiple source documents from the same or different applications.

  • Multiple accounting contracts are represented as one source document.

A performance obligation is a distinct promise in the customer contract to transfer goods or services to the customer. A customer contract can have one or more performance obligations. The source document lines that are included in a contract are grouped into performance obligations.

Performance obligations can be either explicit or implied.

You can configure your setup to identify performance obligations automatically using any of the following:

  • Performance obligation identification rules

  • Performance obligation templates

  • Implied performance obligation templates

Explicit Performance Obligations

Explicit performance obligations are the goods or services that are explicitly stated in the contract.

Implied Performance Obligations

Implied performance obligations include promises that are implied by an entity's customary business practices or published policies. These promises aren't explicitly stated in the contract.

Implied performance obligations:

  • Aren't captured in the upstream applications

  • Can be added automatically in customer contracts using the Implied Performance Obligation templates

  • Can be added manually

Performance Obligation Satisfaction

Satisfaction methods together with satisfaction measurement models specify how a performance obligation is satisfied. Performance obligations can be satisfied at a point in time or over time.

Satisfaction of performance obligations is tracked at the promised detail level and then summarized at the performance obligation level. Performance obligations have one or more promised details lines. Promised details specify what products or services will be provided to the customer and the consideration expected from the customer. Within a performance obligation, all promised details:

  • Belong to a single legal entity

  • Are in the same currency as the performance obligation

Each performance obligation uses one or more satisfaction events that specify what proportion of the promised detail is satisfied. Satisfaction events are created according to the selected satisfaction measurement model. The satisfaction measurement model specifies how satisfaction will be measured and recorded for a promised detail.

Each promised detail uses one of the following satisfaction measurement models:

Satisfaction Measurement Model Description

Measure Quantity Satisfied

Use this model when the customer is promised a specified quantity of goods or services as part of the performance obligation. When this model is used, Revenue Management creates a performance obligation satisfaction event when a quantity of goods or services are delivered or satisfied.

A performance obligation can have multiple satisfaction events if partial quantities are delivered.

Measure Percentage Satisfied

Use this model when the performance obligation satisfaction is measured as a percentage of the work completed. Revenue Management creates satisfaction events based on satisfaction information received from the source applications. The performance obligation satisfaction record is created to specify the percentage of the work completed. Revenue will be recognized in the same proportion as the work completed.

Measure Period Satisfied

Use this model when the performance obligation satisfaction is measured in terms of time periods satisfied. Revenue Management creates the satisfaction event to specify what time period is satisfied and the proportionate revenue for the time period. When this model is selected you must also provide:

  • The satisfaction plan that specifies the total number of periods and the proportionate revenue for each period

  • The start date and optionally the end date of the time period over which the performance obligation will be satisfied

  • If the satisfaction plan is a variable period schedule, the number of periods for the schedule

Import Additional Satisfaction Events for Revenue Contracts

In some circumstances, you may need to import additional satisfaction events into a contract.

For example, let's say that a customer has a telecommunication contract that includes a device with a talk and text plan for a period of 24 months. After nine months, the customer requests a temporary suspension of the contract for three months while she travels abroad.

Suspend Revenue Recognition

You can temporarily suspend revenue recognition for a contract without canceling it and creating a new. Here's how:

  1. Open the Revenue Basis Data Import file-based data import template.

  2. Click the VRM_SOURCE_DOC_SUB_LINES worksheet tab.

  3. In the Period Satisfaction Event Action Type column, enter Reverse.

  4. In the Period Satisfaction Event Effective Date column, enter the date when the contract suspension begins (the date when the application stops recognizing revenue).

  5. Enter any additional required information.

  6. Submit the template and the import process reverses the satisfaction events and the revenue recognized beginning in the period in which the period satisfaction event effective date falls.

Resume Revenue Recognition

At the end of the three-month suspension period, you want the contract to resume revenue recognition. Here's how:

  1. Open the Revenue Basis Data Import file-based data import template.

  2. Click the VRM_SOURCE_DOC_SUB_LINES worksheet tab.

  3. In the Period Satisfaction Event Action Type column, enter Reinstate.

  4. In the Period Satisfaction Event Effective Date column, enter the effective date of the reinstatement, which is the day after the suspension ends.

  5. Enter any additional required information.

  6. Submit the template and the import process creates satisfaction events for that service and recognizes revenue beginning in the period in which the period satisfaction event effective date falls.

After you reinstate revenue recognition, the contract is automatically extended for an additional three months, which is the amount of time the contract was suspended. Contracts are extended by periods or days, depending on the satisfaction plan type:

Satisfaction Plan Type Extended by

Fixed Schedule or Variable Schedule

Number of periods

Daily Rates Partial Periods or Daily Rates All Periods

Number of days

Correct Spreadsheet Errors

If any lines fail during the import process, use the Correct Contract Document Errors spreadsheet to correct the errors.

Validation Considerations

Keep these points in mind when suspending and resuming revenue recognition:

  • The Create Contract Renewal Source Data process doesn't create a renewal contract if revenue recognition of the base contract was put on hold and hasn't yet resumed.

  • The values sent for new attributes are ignored if the corresponding line is renewed.

  • If you suspend and reinstate a base contract before the contract is renewed, then the Create Contract Renewal Source Data process creates the renewed contract with a start date that is the effective plan end date of the base contract plus 1.

    Let's look at an example: Your customer has a base contract with a service that has a start date of 1 May 2018 and an end date of 31 July 2018. The service is suspended from 16 June 2018 and resumed on 1 July 2018. When your customer resumes this service, the effective plan end date is 15 August 2018. The Create Contract Renewal Source Data process creates a renewal contract for this base contract with a plan start date of 16 August 2018.

  • If you process a subline with a Reinstate action and there's no earlier corresponding subline with a Reverse action, then the subline fails validation and appears in the error correction spreadsheet.

  • The process ignores period sublines with an Immaterial change type of Immaterial.

  • The process ignores sublines with Reverse or Reinstate actions that correspond to a devolved performance obligation.

  • When you discard a contract using the Discard Customer Contracts process, any period sublines related to the contract are reset and are then available for reprocessing by the Identify Customer Contracts process.

How Revenue Basis Import Data Is Processed

Use the Revenue Basis Data Import template to enter the revenue data that will be imported into Revenue Management. The template contains a detailed instruction worksheet on how to prepare and upload your revenue data. The template also provides field-level bubble help to help you with entering your data.

You can use the import process to import revenue data or promises to the customers, which are then grouped into performance obligations and contracts.

Settings That Affect the Revenue Basis Data Import Process

The Revenue Basis Data Import template contains an instructions tab, plus three tabs that represent the tables where the data is loaded:

Spreadsheet Tab Description

Instructions and CSV Generation

Contains instruction information about preparing and loading data, the format of the template, submitting the Validate Customer Contract Source Data process, and correcting import errors.

VRM_SOURCE_DOCUMENTS

Enter the source document header information.

VRM_SOURCE_DOC_LINES

Enter information about the source document lines, such as the quantity, unit selling price, and line amount.

VRM_SOURCE_DOC_SUB_LINES

Enter information about satisfaction events.

When entering data in the Revenue Basis Data Import template, ensure the following:

  1. The values for the following columns should be the same in the VRM_SOURCE_DOCUMENTS worksheet and the VRM_SOURCE_DOC_LINES worksheet of the Revenue Basis Data Import template for related rows:

    • Source document type code

    • Source document unique identifier 1 through 5

    • Source document unique identifier character 1 through 5

    • Date of source document

    • Bill-to customer site reference in the source system

    • Ship-to customer site reference in the source system

    • Bill-to customer reference in the source system

    • Ship-to customer reference in the source system

    • Customer classification of a bill-to customer

    • Source system

  2. The values for the following columns should be the same in the VRM_SOURCE_DOC_LINES worksheet and the VRM_SOURCE_DOC_SUB_LINES worksheet of the Revenue Basis Data Import template for related rows:

    • Source document type unique identifier

    • Flexible source document line reference 1 through 5

    • Flexible source document line unique identifier character 1 through 5

How Revenue Data Is Processed

After importing your revenue data, you must:

  1. Run the Validate Customer Contract Source Data process to validate the revenue data.

  2. Correct any errors from the Validate Customer Contract Source Data process using the Correct Contract Document Errors spreadsheet.

  3. Run the Identify Customer Contracts process to identify your contracts and performance obligations.

Guidelines for Reviewing Contracts That Require Attention

The Revenue Management Overview page lists all contracts that require attention. Contracts that require attention are listed in three categories:

  • Pending Review

  • Pending Allocation

  • Pending Revenue Recognition

Contracts Pending Review

The following table lists the possible reasons a contract is pending review and actions that you can take:

Causes Actions

Contracts pending review include:

  • Accounting contracts with a total transaction price that is greater than the user-defined threshold amount you defined in your system options. Contracts in this list are significant value contracts.

  • Accounting contracts that were manually set to Hold.

Review individual contracts by clicking the link for the specific contract. At the contract level, you can review a contract and mark it as reviewed, and it will no longer appear in this tab. The accounting contract becomes available for further processing by Revenue Management.

If you need to review additional information, you can view the contract history, and the performance obligation, promised detail, and satisfaction event details.

Contracts Pending Allocation

The following table lists the possible reasons a contract is pending allocation and actions that you can take:

Causes Actions

Contracts pending allocation include:

  • Accounting contracts with missing standalone or estimated selling prices at the promised detail level or at the performance obligation level.

  • Accounting contracts with performance obligations in foreign currencies where the conversion rate is not available.

Review individual contracts by clicking the link for the specific contract. Within each contract, you can view information about what is missing for each promised detail line. For example, the promised detail line may be missing the standalone selling price.

Once the missing information is uploaded, you can run the Identify Customer Contracts program to allocate the transaction price.

Contracts Pending Revenue Recognition

The following table lists the possible reasons a contract is pending revenue recognition and actions that you can take:

Causes Actions

Contracts that are pending revenue recognition include accounting contracts missing required revenue attributes, such as:

  • Satisfaction plan

  • Satisfaction plan start date

  • Satisfaction plan end date

  • Satisfaction plan duration

Review each individual contract by clicking the link for the specific contract. Within each contract, click on the Promised Details tab and check each of the promised details to determine which promised details are missing revenue attributes.

Update the required missing attributes. The accounting contract becomes available for further processing by Revenue Management.

Points to remember about satisfaction plans:

  • The plan start date is required for all satisfaction plans.

  • For satisfaction plans of type Fixed or Variable, the application derives the Satisfaction Plan Duration from the Scheduling Rules setup and you cannot enter the Plan End date.

  • If the satisfaction plan is of type Daily Rate, then the Plan End Date is required and you cannot enter the Satisfaction Plan Duration.

How Billing Data Import Data Is Processed

Use the Billing Data Import process to enter billing data into Revenue Management for your revenue data.

The template contains a detailed instruction worksheet on how to prepare and upload your billing data. The template also provides field-level bubble help to aid you with entering your data.

You can then use the import billing data process to import the billing data.

To access the template, complete the following steps:

  1. Navigate to the File-Based Data Import for Oracle Financials Cloud guide.

  2. In the Table of Contents, click File-Based Data Imports.

  3. Click Billing Data Import.

  4. In the File Links section, click the link to the Excel template.

Follow these guidelines when preparing your data in the worksheet:

  • Enter the required information for each column. Refer to the tool tips on each column header for detailed instructions.

  • Do not change the order of the columns in the template.

  • You can hide or skip the columns you do not use, but do not delete them.

Settings That Affect the Billing Data Import Process

The Billing Data Import template contains an instructions tab and a tab that represents the table where the billing lines are loaded:

Spreadsheet Tab Description

Instructions and CSV Generation

Contains instruction information about preparing and loading data, the format of the template, submitting the Import Billing Data process, and correcting import errors.

Billing Line Details

Enter information about the billing lines to be imported from the billing application for the revenue lines.

When entering data in the Billing Data Import template, ensure the following:

  1. The value of the following column should be the same in the Billing Line Details worksheet of the Billing Data Import template and all of the tables (worksheets) of the Revenue Basis Data Import template for all related rows:

    • Source document type code

  2. The value for the following columns should be the same in the Billing Line Details worksheet of the Billing Data Import template and the VRM_SOURCE_DOC_LINES and VRM_SOURCE_DOC_SUB_LINES worksheets of the Revenue Basis Data Import template for related rows:

    • Source document line unique identifier 1 through 5

    • Source document line unique identifier character 1 through 5

    • Source system

How Billing Data Is Processed

After loading your billing data, you must:

  1. Run the Import Billing Data process to match the billed amount to each corresponding promised detail line.

  2. Run the Recognize Revenue of Customer Contracts process to generate the journal entries to account for the billing of the performance obligation.

Once your billing data is processed, you can then review the billed amount at the promised detail, performance obligation, and contract header levels.

Classify Contract Revisions

The ASC 606 and IFRS 15 accounting standards disclosure requirements require entities to distinguish between revisions to contract data that reflect estimation accounting and those that reflect true contract modifications.

Revision Intent Type

The two categories of revision are as follows:

Revision Intent Type Description

Variable Consideration Estimation Correction (Estimate Correction)

Estimate corrections occur when an organization originally estimates contract terms at the inception of the contract, and later the organization needs to adjust the initial estimate.

Contract Modification

Contract modifications occur when an organization and their customer agree to a change in the scope or price of the contract. For example, the customer may want to purchase additional goods or services that were not originally agreed upon.

In support of the reporting requirement, use the revision intent type to indicate the classification of the revision by:

  • Including the revision intent type value in the Revenue Basis Data Import file-based data import worksheet to capture the intent from your upstream source systems.

  • Specifying a default revision intent type based on the source type on the Manage Source Document Types page to automatically assign when processing a contract revision.

  • Manually assigning the revision intent type using the Manage Customer Contracts page.

Assign the Revision Intent Type in Upstream Source Applications

If your upstream source application enables you to assign and provide the revision classification for contract revision lines, you can use the Revision Intent attribute in the Revenue Basis Data Import FBDI worksheet to capture the revision intent type. Use the Correct Source Document Line Errors integrated workbook to correct any errors.

Assign the Revision Intent Type Based on the Source Document Type

If you are not able to assign a revision classification in the upstream source applications, you can systematically assign a default revision classification to the revision line based on the source of the line in the Manage Source Document Types page.

Revenue Management includes predefined revision intent values for the following source document types:

Source Document Name Predefined Default Revision Intent Type

CPQ Cloud

Contract Modification

DOO Sales Order

Contract Modification

Oracle Fusion Contracts

Contract Modification

Oracle Fusion Receivables

Contract Modification

Project Billing

Estimate Correction

Receivables

Contract Modification

Sales Orders

Contract Modification

Update the Revision Intent Type

You can update the revision intent type on the Manage Customer Contracts page, regardless of whether the revision intent type was originally assigned:

  • By the source application.

  • By default based on the source document type.

Discard Customer Contracts

When reviewing customer contracts and their associated performance obligations, you may decide to discard the customer contracts. A contract in any status is eligible for discard.

Note: You can discard contracts only in ledgers that you have access to.

To discard customer contracts and their performance obligations, run the Discard Customer Contracts process. The process:

  • Sets the status of those contracts to Discarded

  • Sets the transaction price to zero

  • Reverses the accounting entries, if any were created previously

After the customer contracts are discarded, you can modify your system configuration and then submit the Identify Customer Contracts process to reprocess the source document lines of the discarded customer contracts. The source document lines are processed as if they are newly received source document lines.

View Discarded Contracts

You can view discarded customer contracts by selecting the Discarded status on the Manage Customer Contracts page. Discarded contracts are available in read-only format. You cannot update discarded contracts.

Guidelines for Renewing Revenue Contracts Automatically

You can automatically renew customer contracts when the initial period ends. When you use this feature, designated customer contracts can be rolled over or converted to new periodic contracts (for example, month-to-month contracts) when the original contract term ends.

For example, a customer signs up for a two-year wireless contract. After the two-year wireless services are completed, the completed contract becomes a month-to-month contract, until the customer explicitly terminates the contract.

Accounting contracts created in Revenue Management consist of one or more performance obligations. Performance obligations contain promised detail lines that represent the item or service that is promised to the customer. Promised detail lines, or service lines, are created from source document lines.

To be eligible for renewal, contracts must meet the following criteria:

  • Contract must have promised detail lines that are designated as recurring.

  • Allocation status is Allocated, Exempted or Not Required.

  • Freeze date is earlier than or equal to the current processing date.

Promised detail lines that are eligible for renewal processing must have the following characteristics:

  • Promised detail line is recurring.

  • Satisfaction measurement model is Period.

  • Revenue Rule type of the satisfaction plan is Daily Rate, Partial Periods.

Promised detail lines are identified as recurring by the following attributes:

  • Recurring indicator

  • Recurring frequency

  • Recurring pattern

  • Recurring amount

When the recurring promised detail lines of eligible accounting contracts reach their satisfaction plan end date, the Create Contract Renewal Source Data process generates new source document headers and lines based on the recurring attributes. On the next execution of the Validate Customer Contract Source Data and Identify Customer Contracts processes, the lines are identified into new recurring accounting contracts.

Considerations for Processing Actions

The processing actions you can perform on accounting contracts that contain recurring promised detail lines are restricted based on whether they are performed during the initial accounting contract term or the recurring term.

You can perform the following actions during the initial term of the original accounting contract:

  • Modify recurring attributes

    You can change any of the recurring attributes on the promised detail line before the contract freeze date on the original accounting contract. However, once the original accounting contract is frozen or billing is applied to the recurring promised detail line, you cannot modify the Recurring indicator of the promised detail line.

  • Modify promised detail lines

    You can change the quantity, amount, and satisfaction plan date using a contract revision. Contract revisions are either material or immaterial. Perform promised detail line modifications as source document line revisions.

You can perform the following actions after the initial term of the recurring promised detail line expires and the promised detail line is part of a recurring contract:

  • Termination of the contract

    Termination is the only action allowed once the promised detail lines have been renewed. The automatic renewal of the service promised detail line continues each periodic cycle until the customer explicitly terminates the contract. To terminate the service, you must send a revision line for the original order line to Revenue Management with the effective termination date.

Create a Recurring Service Line

In this example, you create a recurring service line.

Let's say your organization is offering a promotional service plan. The plan consists of a one-year wireless contract that converts to a month-to-month contract after the one-year wireless services are completed on May 31, 2019. The rates for the month-to-month contract are:

  • $60 for talk and text

  • $40 for unlimited data

The services are renewed each month until your customer explicitly terminates the contract.

In this example, there are three lines:

  • Device

  • Talk and text service

  • Unlimited data service

Identify Recurring Service Attributes

  1. Open the Revenue Basis Data Import file-based data import template to import your order lines or sales data from your source application.

  2. Populate the required fields in the Source Documents and Source Document Lines tabs.

  3. Enter these values in the Talk and Text line:

    Field Value

    Recurring Indicator

    Y

    Recurring Frequency

    1

    Recurring Pattern

    MO

    Recurring Amount

    60.00

  4. Enter these values in the Unlimited Data line:

    Field Value

    Recurring Indicator

    Y

    Recurring Frequency

    1

    Recurring Pattern

    MO

    Recurring Amount

    40.00

  5. On the Instructions and DAT Generation tab, click Generate DAT File.

Create Recurring Service Lines
After importing your order lines into Revenue Management:
  1. Run the Validate Customer Contract Source Data process to validate the revenue data.

  2. Correct any errors from the Validate Customer Contract Source Data process using the Correct Contract Document Errors spreadsheet.

  3. Run the Identify Customer Contracts process to identify your contracts and performance obligations.

  4. Once you successfully upload and process the recurring source document lines, view the resulting recurring promised detail lines on the Edit Customer Contract page on the Promised Details tab.

How Contract Renewal Source Data Is Processed

You can renew eligible expired recurring promised detail lines by running the Create Contract Renew Source Data process.

The process:

  • Scans the existing promised detail lines of your performance obligations to determine which lines have reached their plan end date.

  • Determines renewal eligibility of the promised detail line and contract.

  • Locates the latest source document header and line version for the eligible promised detail line.

  • Creates new source document headers and lines by using the latest source document version line, and then updates the data to reflect the new plan period and amount or termination.

  • Writes the new source document header and lines to the source document tables for further processing.

After the process is complete, submit the Validate Customer Contract Source Data and Identify Customer Contracts processes to process any newly received source documents.

Settings That Affect Contract Renewal Source Data

When you run the Create Contract Renewal Source Data process, the process considers only the promised detail lines of valid accounting contracts. Valid accounting contracts have the following settings:

  • The allocation status is one of the following:

    • Allocated

    • Not Required

    • Exempted

  • The freeze date is earlier than or the same as the system date.

For valid accounting contracts, recurring promised detail lines with the following conditions are eligible for renewal:

  • Termination date is blank or later than the system date.

  • Promised detail lines are not tagged as discarded.

  • Revenue has been fully recognized.

  • Promised detail lines were not already processed for renewal.

  • Data Transformation Status is processed.

  • Promised detail lines have no outstanding unprocessed return lines.

How Contract Renewal Source Data Is Processed

Using the original (parent) source document header and line of the recurring promised detail line as a basis, the process generates a new source document to reflect the new service period. The new source documents are copies of the latest version of the source document lines used to create the promised detail lines with the following modifications:

  • The following columns in the SOURCE_DOCUMENTS table are updated as follows:

    Field Value

    Document Date

    Earliest plan start date

    Recurring Header Sequence Number

    Incremented by one on each copy

  • The following columns in the SOURCE_DOC_LINES table are updated as follows:

    Field Value

    Document Date

    Satisfaction plan end date plus one day

    Quantity

    Recurring amount divided by the unit selling price

    Line Amount

    Recurring Amount

    Satisfaction Plan Start Date

    Satisfaction plan end date plus one day

    Satisfaction Plan End Date

    Satisfaction plan end date is incremented by the recurring frequency and recurring pattern

    Version Number

    1

    Version Indicator

    N

    Contract Modification Date

    Blank

    Revision Intent Type

    Blank

    Add to Contract Indicator

    Blank

    Add to Contract Action Code

    Blank

    Recurring Line Sequence Number

    Incremented by one on each copy

    Contract Group Number

    If blank, the line document number is concatenated with the customer contract number. Otherwise, the original contract group number is used.

    Line Creation Date

    System date

The Identify Customer Contract process processes the newly created recurring source document line using the original recurring source document line identification value, and bypasses the Contract Identification Rule logic. The contract is then assigned a freeze date equal to the document date plus one day, regardless of the freeze rule of the original contract identification rule.

When a contract is first renewed, if no contract group number is assigned to the original accounting contract, the Identify Customer Contract process assigns a contract group number to the contract. The system-generated contract group number consists of the document number concatenated with the contract number of the parent accounting contract. The same contract group number is used for subsequent renewals.

Billing Lines for Free Goods or Services

Some contracts may contain goods or services that are free. To account for these free services, you can configure Revenue Management to automatically create a billing line with an amount of zero when you import a revenue source document line with a unit selling price of zero into Revenue Management. The Revenue Management-created bill line can then be applied to the performance obligation value, clearing the right to bill.

When a zero-priced transaction line is fully satisfied, Revenue Management generates a zero bill line only if no zero bill line was received from the source system to clear the balances in the contract asset and allocated discount accounts.

If you revise the full satisfaction status of a zero-priced transaction line, Revenue Management discards the previous zero bill line and the associated accounting, and creates a new zero bill line based on the revised full satisfaction date.

In the event that the source application subsequently sends in a zero bill line after Revenue Management created the zero bill line, the Revenue Management-created bill line is replaced with the source system bill line. The Revenue Management-created zero bill line is discarded and its accounting is reversed and replaced with the appropriate account for the source application bill line.

FAQs for Manage Customer Contracts

How can I correct contract document errors?

Correct contract document errors by using a spreadsheet provided by Revenue Management.

Correct errors using the following steps:

  1. From the Overview page, click the Correct Contract Document Errors in Spreadsheet panel tab and download the Correct Contract Document Errors spreadsheet.

  2. From the Summary sheet, review the count of error records for documents, document lines, and document sublines.

  3. Review and correct the errors in the respective areas based on the error message displayed on each line.

  4. After correcting the records on all tabs, click Upload.

What's an implied performance obligation?

Implied performance obligations are obligations that are implied by customary business practices or published policies outside of the contract. Although implied performance obligations may or may not be defined in a contract, they are considered part of the contract and must be satisfied to meet the contract requirements. For example, common implied obligations are warranties that are associated with software licenses, repair services that are packaged with installation of servers, and customer support associated with implementation of business applications.

Manage Standalone Selling Prices

Create Standalone Selling Prices Using a Spreadsheet

This example shows you how to manually upload new standalone selling prices to Revenue Management.

The following steps are covered in this example:

  • Downloading the Create Standalone Selling Prices spreadsheet.

  • Entering standalone selling prices for the item, item group, memo line, or performance obligation template.

  • Uploading the entered standalone selling prices into Revenue Management.

  • Verifying that the uploaded standalone selling prices are registered in the application using the Manage Standalone Selling Prices spreadsheet.

Create Standalone Selling Prices

Your company has just launched a new hardware product in August 2016. The product is targeted at only large and medium enterprise customers in the US market. The product has never been available to the general public before and therefore, there are no standalone selling prices. No other competitors sell similar or comparable products. The revenue manager has worked with the sales director who owns this product and the internal compliance team and obtained an approved selling price list on August 14, 2016.

Tools

Spreadsheet Use

Create Standalone Selling Prices

Enables you to enter standalone selling prices directly into Revenue Management. The spreadsheet facilitates data entry by populating the list of items, item groups, memo lines, and performance obligation templates defined for a selected Standalone Selling Price Profile.

Manage Standalone Selling Prices

Enables you to query existing established standalone selling prices in Revenue Management. You can also update standalone selling prices directly using this spreadsheet if the standalone selling prices are not yet being used in the revenue recognition process.

Note: You can update standalone selling prices only if they were uploaded through the Create Standalone Selling Prices spreadsheet. Observed standalone selling prices cannot be updated in this spreadsheet. Observed standalone selling prices are standalone selling prices that were calculated by the Calculate Observed Standalone Selling Prices process.

Note: It is assumed that the standalone selling prices were approved offline before uploading.
  1. On the Setup and Maintenance page, enter Define Observed and Estimated Standalone Selling Prices in the Search field and click the Search icon.

  2. Click the Define Observed and Estimated Standalone Selling Prices link.

  3. Click the Manage Standalone Selling Price Profiles link.

  4. On the Manage Standalone Selling Price Profiles page, enter Hardware Business in the Name field and click Search.

  5. Click the Hardware Business link in the Search Results table.

  6. On the Edit Standalone selling Price Profile page, scroll down to the Assignments section and select the first item in the search results table.

  7. Click the Create SSP button.

  8. On the Create Standalone Selling Prices popup window, enter the current period for the Effective Period, and USD as the Default Currency.

  9. Click Save and then click Open.

  10. Enter user name and password.

  11. On the Create Standalone Selling Prices spreadsheet, notice that the application has populated the Item ID, description, and other relevant information. Enter all required information and any additional information in the optional columns, such as the unit of measure or pricing dimension.

  12. Once completed, click Create SSP and click Upload. Note that you may be prompted to reenter your user name and password again if you work on the spreadsheet for too long.

  13. In the Upload Options dialog box, accept the default option and click OK.

  14. Verify the status of the standalone selling price for each row in the Status column to confirm that each row was inserted successfully.

  15. Verify the standalone selling prices you have uploaded using the Manage Standalone Selling Prices in Spreadsheet task.

This example shows you how to review and manually edit standalone selling prices in Revenue Management.

Use the Manage Standalone Selling Prices spreadsheet for the following:

  • Review all standalone selling prices in a given period.

  • Analyze standalone selling prices for a given item (good or service) across periods.

  • Change existing standalone selling prices that were manually uploaded but are not yet being used in the revenue recognition process.

Review and Edit Standalone Selling Prices

  1. From the Revenue Management Overview page, click the Manage Standalone Selling Prices in Spreadsheet panel tab.

  2. Click Yes to connect to the server.

  3. Enter your user name and password.

  4. In the Manage Standalone Selling Prices spreadsheet, enter the previous period as the Effective Period.

  5. Click Search.

  6. The search results return standalone selling prices for all items, item groups, memo lines and performance obligation templates that are already established for the given period.

    You cannot make any changes to the observed standalone selling prices calculated by the Calculate Observed Standalone Selling Prices process. The User Defined column indicates if the standalone selling price was entered manually by the user or calculated by the application. You can make changes to any manually entered standalone selling prices as long as they have not yet been used by the revenue recognition processes.

    Notice the list of all standalone selling prices for all items that have already been established.

  7. Make the required changes to your standalone selling prices.

  8. When you are finished, click the Manage SSP tab, then click Upload.