Guidelines for Defining Revenue Policies

Use the Manage Revenue Policies page to define revenue policies for each applicable business unit. Receivables uses the revenue policy definition to make automatic revenue recognition decisions for manually entered and imported transactions.

Receivables compares each transaction against the revenue policy, and assigns revenue contingencies to the transaction or transaction lines that deviate from the policy definitions.

Credit Classification

Use credit classifications to identify your high risk, noncreditworthy customers. You can assign up to three levels of risk. Receivables compares these risk levels to the credit classification assigned to the customer profile.

When you enter or import a transaction for a customer with a credit classification that matches one of the credit classifications in the revenue policy, Receivables:

Assigns the Customer Creditworthiness contingency to the transaction.
Defers revenue on the entire transaction.
Recognizes revenue on the transaction only to the extent of payments received.

Refund Policy Threshold

Use the Refund Policy Threshold column to enter the standard refund period in days that you typically offer to your customers.

When you enter or import a transaction with a line associated with a contract, Receivables analyzes the contract details. If the contract offers a refund period that exceeds the refund policy, Receivables:

Assigns the Refund contingency to the transaction line.
Defers revenue on the transaction line.
Recognizes revenue on the transaction line only after the refund period on the transaction line expires.

Payment Terms Threshold

Use the Payment Terms Threshold column to enter the maximum time period in days before payment terms become extended.

When you enter or import a transaction with payment terms or an installment schedule that exceeds the payment terms policy, Receivables:

Assigns the Extended Payment Terms contingency to the transaction.
Defers revenue on the entire transaction.
Recognizes revenue on the transaction only to the extent of payments received.

For example, you enter a payment terms threshold of 180 days on your revenue policy, and you later enter or import an invoice with payment terms that have four installments:

Net 60
Net 90
Net 120
Net 200

Receivables defers the entire revenue amount on the invoice because the last installment exceeds the 180-day threshold by 20 days.