How Revenue Scheduling Rules Are Used

Use revenue scheduling rules to determine revenue recognition schedules for your transaction lines. Revenue scheduling rules determine the accounting period or periods in which to record revenue distributions. You can assign a different revenue scheduling rule to each transaction line.

Settings That Affect Revenue Scheduling Rules

When you create a revenue scheduling rule, you assign the reference set, enter a rule name and description, and select the rule type:

If the rule type is Fixed Schedule, you also enter the number of periods over which to recognize revenue for this revenue scheduling rule. The rule start and end dates are populated when you apply the revenue scheduling rule to the transaction line.
If the rule type is Variable Schedule, you can optionally specify the percentage of revenue to recognize in the first period. The remaining revenue is then prorated over the number of periods that you specify on the transaction line.

To use revenue scheduling rules on a transaction, you select an invoicing rule for the transaction and assign revenue scheduling rule information to each transaction line. Perform these entries for each rule type that you select on a transaction line:

Daily Revenue Rate, All Periods or Daily Revenue Rate, Partial Periods: Enter a rule start date and a rule end date for the transaction line.
Fixed Schedule: The default rule start date is the transaction accounting date, but you can change it. The number of revenue periods is populated on the transaction line according to the rule type definition.
Variable Schedule: Enter a rule start date and the number of revenue periods over which to distribute revenue for the transaction line.

How the Revenue Schedule Is Calculated

The rule type on the revenue scheduling rule calculates the revenue distributions on the transaction:

The Daily Revenue Rate, All Periods rule type uses a daily revenue rate to accurately calculate revenue distributions across all accounting periods, including both full and partial periods. A partial period is an accounting period with either a start date that isn't the first day of the period or an end date that isn't the last day of the period.

Note: This rule type provides the most precise revenue recognition schedule. Use rules of this type in cases where you must meet strict revenue accounting standards for partial accounting periods.

Rules of this type require a rule start and end date during transaction entry. If the transaction is imported with a rule of this type, then both dates are required by AutoInvoice.

This rule type uses the total revenue amount for the line in conjunction with the number of days in the rule duration period, including both start and end date, to calculate the daily revenue rate. This calculation is:
```
Daily Revenue Rate = Total Revenue / Number of Days (Total Rule Duration Period)
```
This rule type can accurately calculate the revenue for each period in the revenue recognition schedule. This calculation is:
```
Revenue Amount = Daily Revenue Rate * Days in Period
```
The Daily Revenue Rate, Partial Periods rule type uses a daily revenue rate to accurately calculate the revenue for partial periods only. This rule provides you with an even, prorated revenue distribution across the full periods of the schedule.

Rules of this type also require both a start and end date to enable the calculation of the daily revenue rate.
The Fixed Schedule rule type uses the number of periods that you define over which to recognize revenue. By default, the percentage of revenue is evenly divided across the periods. For example, if you define a revenue scheduling rule that spans four periods, and you accept the prorated revenue distribution, Receivables recognizes 25 percent of the transaction revenue in each of the four months.

When you define a fixed schedule revenue scheduling rule, you can update the percentage of revenue recognized in each period, but the percentage for the entire schedule must always total 100.
The Variable Schedule rule type doesn't require the number of periods. You enter the number of periods when you enter the rule on a transaction line manually or import using AutoInvoice.

When you define a variable schedule revenue scheduling rule, you can optionally specify what percentage of revenue you want to recognize in the first period. The remaining revenue is then prorated over the number of periods that you specify when the transaction is created.

Using Revenue Scheduling Rule Types

You bill a 90-day contract for $900. The contract starts on January 14 and ends on April 13. The accounting period is Monthly. In this contract period, January and April are partial periods, and February and March are full periods.

This table illustrates the various revenue recognition schedules that Receivables calculates using each of the rule types.

Accounting Date	Period	Days in Period	Daily Revenue Rate, All Periods	Daily Revenue Rate, Partial Periods	Fixed Schedule	Variable Schedule
January 14	January	18	180	180	225	180
February 14	February	28	280	295	225	240
March 14	March	31	310	295	225	240
April 13	April	13	130	130	225	240

Observations on this example:

If the revenue scheduling rule is Daily Revenue Rate, All Periods, then Receivables calculates the daily revenue rate ($900 / 90 days = $10) and uses the rate to calculate the revenue in each period. Receivables uses the final period to catch up with any rounding issues.
If the revenue scheduling rule is Daily Revenue Rate, Partial Periods, then Receivables uses the daily revenue rate to calculate the revenue for only the partial periods. The full periods receive equal revenue distributions.
If the revenue scheduling rule is Fixed Schedule, then Receivables uses the rule definition and divides the revenue equally across the number of periods specified in the rule.
If the revenue scheduling rule is Variable Schedule, then you specify the rule start date and the number of periods during invoice entry. The rule definition specifies the percentage of revenue to recognize in the first period. Receivables evenly distributes the revenue balance over the remaining periods that you entered. In this example, 20 percent of the total revenue is recognized in the first period out of a total of four periods.