Guidelines for Integrating Revenue Management with Enterprise Contracts and Project Billing

Use this integration when a customer contract includes project work together with other goods or services, or when the agreed selling price differs from the usual selling price. Enterprise Contracts provides the contract and line details and Project Billing provides the revenue amounts and progress information.

Overview

You can create project contracts in Enterprise Contracts and calculate project revenue in Project Billing. You can also import contracts, contract lines, and revenue information into Revenue Management so that project revenue can be handled together with goods and services from other Oracle applications. Revenue Management imports contract lines as promised details, groups promised details into customer contracts and performance obligations, allocates revenue across promised details, tracks progress for each promised detail, and creates accounting entries in accordance with ASC 606 and IFRS 15.

Differences Between Project Billing and Revenue Management

This table summarizes the main differences between Project Billing and Revenue Management for this integration.

Criteria	Project Billing	Revenue Management
Revenue basis	Revenue is based on the negotiated selling price for each project contract line.	Revenue is based on the revenue allocated to each promised detail.
Recognition level	Revenue is recognized and accounted for at the bill transaction level. Each bill transaction can have its own item, quantity, unit of measure, unit price, and accounting attributes.	Revenue is recognized when a promised detail is satisfied. A promised detail has one item or memo line, unit of measure, unit price, allocated revenue amount, and satisfaction timeframe. Each satisfaction has a quantity delivered, time elapsed, or percentage progress.
Revenue calculation	Revenue can be calculated using rates, cost-plus markup, burdening, percent spent, percent complete, custom formulas, milestones, or billing events.	Revenue is calculated using quantity multiplied by unit standalone selling price (SSP), allocated revenue divided by the number of periods, or allocated revenue multiplied by the satisfaction percentage.
Satisfaction measurement	Satisfaction is expressed as a percentage calculated from recognized revenue divided by the project contract line amount. An amount cannot be extracted directly as satisfaction.	Satisfaction can be measured by quantity, period, or percentage. Percentage is used for Project Billing integrations. An amount cannot be imported directly as satisfaction.
Accounting model	Supports the contract asset and liability model and the legacy unbilled receivables and deferred revenue model.	Supports the contract asset and liability model in accordance with ASC 606 and IFRS 15.
Contract classes	Supports external, intercompany, and interproject Enterprise Contracts.	Supports external Enterprise Contracts.
Maximum recognizable revenue	May be unlimited when no limit or a soft limit is used, or limited to the contract line amount when a hard limit is used.	Limited to 100 percent of the allocated revenue for each promised detail.
Contract modeling	Each project contract line is extracted as one promised detail. Project Billing does not group project contract lines into performance obligations or customer invoicing levels, and it does not split one contract line into multiple promised details.	Promised details can be grouped into performance obligations. However, allocation, revenue recognition, invoicing, and discount accounting remain at the promised-detail level for this integration.
Standalone selling price	Unit SSP and unit list price are not extracted from Project Billing.	SSP is assigned at contract inception through an SSP profile or a source document line update.
Accounting attributes	Provides contract, contract line, revenue plan, project, task, and transaction attributes, including transaction item and provider organization. Accounting period is derived from the transaction accounting date.	Provides contract, performance obligation, promised detail, and satisfaction attributes. Transaction-level attributes such as transaction item and provider organization are not available. Accounting period is derived from the satisfaction measurement date, which is imported from the transaction accounting date.

Contract Amendments and SSP Changes

Caution: Changing a project contract line amount can cause substantial adjustments in Project Billing and Revenue Management.

Revenue Management assigns SSP when the contract starts. If a later addition has a significantly different SSP, end the existing performance obligation and create a new one, based on your accounting policy.

When to Use the Integration

Supported Business Scenarios

Use the integration when:

Revenue Management must recognize allocated revenue because project contract lines are bundled with items or services from one or more source applications.
Contract lines in the bundle are discounted from SSP at different rates.
Unit SSP differs from the negotiated unit selling price.
SSP can be determined from expected gross margin, (difference between project cost and revenue budgets), unit prices stored in the SSP repository, or source-document line updates.
Differences between revenue recognized in Project Billing and Revenue Management are expected, reconcilable, and acceptable under the organization's accounting policy.
Invoicing and revenue recognition are performed at the promised-detail level.
Revenue accounting uses the contract asset and liability model required by ASC 606 and IFRS 15.

Project Contract Line Requirements

Project contract lines used with the integration must meet these conditions:

The contract line is external.
The contract line is fixed price.
The contract line uses a hard limit so that revenue is not recognized above the contract line amount.
The revenue method measures satisfaction using percent progress.
The associated projects have baselined project cost and revenue budgets.
The project contract line identifier is unique within the characters transferred to Revenue Management.

Nonunique or Long Contract Line Numbers

When the first 30 characters of the project contract line number are not unique:

Map the full contract line number from the Source Document Lines source view to an available Source Attribute Char extensible attribute in the Manage Source Document Types setup task.
Use that attribute in customer-contract identification and performance-obligation identification rules.

Contract line amount amendments

Avoid amendments that change project contract line amounts because they can cause extensive adjustments in both applications. When such amendments are required, enable the automatic satisfaction percentage adjustment feature described in the configuration topic.

Configure the Enterprise Contracts and Project Billing Integration

Follow these steps:

Select the ledger and extraction start date.
Decide whether Revenue Management or Project Billing will create revenue accounting entries.
Determine whether foreign-currency revenue will use the transaction accounting date or contract start date for conversion.
Confirm the memo lines, project items, and SSP profiles used for the integration.
Decide whether project contract line amounts can be amended.
Activate the Oracle Fusion Contracts source document type in the Manage Source Document Types task.
Select the ledger, Oracle Fusion Contracts as the source document type, and enter the extraction start date in the Integration region of the Manage System Options for Revenue Management setup task. Enter a date on or after January 1, 2014.

Caution: You cannot change the extraction start date after the first extraction. Revenue Management imports all qualifying external project contracts created on or after this date.
A qualifying contract has all of these characteristics:
- Contract class: Enterprise Contracts
- Intent: Sell
- Line class: Project
- Billing type: External
Enable Perform Project Contract Revenue Accounting in Revenue Management on the Edit Features: Project Billing page, and enter the Adoption Date and Adoption Period for the ledger in the Thresholds region of the Manage System Options for Revenue Management setup task, when Revenue Management must create the revenue, contract asset, and contract liability entries.
When Project Billing must continue creating entries to credit project-owning, task-owning, or expenditure-owning organizations, leave the feature disabled and leave the Adoption Date and Adoption Period null. Configure Project Billing to debit a revenue clearing account and Revenue Management to post the corresponding credit.

Configure the currency conversion date for contracts in a currency other than the ledger currency.

This table shows the setup required to configure conversion dates :

Conversion Date	Allocation Currency Basis	Additional Setup
Transaction accounting date	Entered	In the Specify Customer Contract Business Function Properties setup task, set the revenue transaction conversion date type to Transaction accounting date.
Contract start date	Accounted	Create the custom profile option PJB_LED_CURR_CONV_CON_ST_DT and set its value to Y.

Update the unit of measure and create reference accounts for these seeded Receivables memo lines:
- Fixed Bid Contract Line: Use for contract lines assigned to a revenue plan with a method classification of Percent Spent, Percent Complete, or Amount Based.
- Time and Material Project: Use for contract lines assigned to a revenue plan with a method classification of Rate Based, As Incurred, or As Billed.
Add the seeded memo lines and all applicable project-related items to the appropriate SSP profiles.
Confirm that the required accounting periods are open for the selected ledger and for Revenue Management processing.
Create and enable a customer-contract identification rule with these values:
- Set the priority required by your rule-evaluation design.
- Select Oracle Fusion Contracts as the source document type.
- Select Document Identifier as the source document attribute.
- Enter 1 as the matching group.
Create and enable a performance-obligation identification rule with these values:
- Set the priority required by your rule-evaluation design.
- Set Exempt from Allocation to No.
- Set Satisfaction Method to Allow partial.
- Set Foreign Currency Treatment to Monetary when using the transaction accounting date for currency conversion.
- Select Oracle Fusion Contracts as the source document type.
- Select Document Line Identifier as the source document attribute.
- Enter 1 as the matching group.
Enable Automatic Adjustment of Total Satisfaction Percentage in Revenue Management for a Contract Line Amount Amendment on the Edit Features: Project Billing page when project contract line amounts can be amended.

Caution: Enable this feature only when line amount amendments are part of the approved business process. Such amendments can generate substantial adjustment activity.

Import Project Contract and Revenue Data into Revenue Management

After completing the setup, use the processes available in Enterprise Contracts, Project Billing, and Revenue Management to manage revenue.

Follow these steps:

Create and activate the project contract or project contract amendment in Enterprise Contracts. Activation makes the contract eligible for extraction to Revenue Management.
Run Generate Revenue in Project Billing.
The process creates revenue distributions and marks them as eligible for extraction.
Run Extract Revenue Basis Data in Revenue Management.
The process imports these details:
- New project contracts from Enterprise Contracts as customer contract headers.
- New or amended project contract lines as promised details.
- New Project Billing revenue distributions as satisfaction events.
Run Validate Customer Contract Source Data to validate the information imported from Enterprise Contracts and Project Billing.
Correct validation errors using the Correct Contract Document Errors spreadsheet, and run the validation process again.
Run Identify Customer Contracts.
The process performs these tasks:
- Identifies new or revised customer contracts and performance obligations.
- Assigns SSP values to promised details.
- Allocates or reallocates the total negotiated selling price to promised details.
- Determines whether initial performance has occurred.
- Determines whether performance obligations are fully or partially satisfied.
- Recognizes revenue based on satisfaction.
- Creates revenue, contract asset, and contract liability accounting entries.
- Reverses and rebooks accounting entries when promised details are revised or reallocated.
Review the customer contracts, performance obligations, promised details, satisfaction events, revenue schedules, and accounting entries created.

Reconcile Revenue Between Project Billing and Revenue Management

Revenue amounts can differ between the two applications. Project Billing uses the negotiated contract line amount, while Revenue Management uses the amount allocated to the promised detail based on SSP.

Follow these steps:

Compare the project contract line amount with the transaction price allocated to the corresponding promised detail.
Compare the Project Billing revenue percentage with the satisfaction percentage imported into Revenue Management.
Confirm that differences result from expected SSP allocation, contract discounts, or satisfaction timing.
Review foreign-currency conversion dates and rates when the contract currency differs from the ledger currency.
Review amendments, reallocations, reversals, and rebooking entries for revised contract lines.
Confirm that revenue-clearing debits and credits offset as designed when both applications create accounting entries.
Resolve validation errors and contract document errors before completing the reconciliation.
Reconciliation is complete when all differences are explained by approved allocation, satisfaction, currency, amendment, or accounting rules, and the accounting entries balance.