Revenue Recognition and Prepay with Drawdown
The Advanced Revenue Management (Essentials) feature integrates with the Prepay with Drawdown feature. This integration lets you accurately recognize revenue for both prepay and usage elements.
To enable the Prepay with Drawdown feature, go to Setup > Company > Setup Tasks > Enable Features (Administrator). On the Transactions subtab, in the Billing section, check the Prepay with Drawdown box. Prepay with Drawdown can only be enabled if the Advanced Subscription Billing feature is enabled and the Create Revenue Elements for Subscription Revisions accounting preference is disabled.
Using the Prepay with Drawdown feature, customers can pay a set amount before using the service lines in their contract. The upfront payment is the sales amount on the prepay element, which is fully billed at the start of the subscription. As usages are recorded, the service rate determines the amount transferred from the prepay element to the usage elements. Invoices are created to reduce the prepay element's bill amount, which increases the sales and bill amounts for the usage elements.
When the subscription term ends, the service provider can either refund the remaining prepay element amount or recognize it without a refund.
For Prepay and Usage subscription line types, make sure the Create Revenue Plans On field is set to Subscription Events and the Allocation Type field is set to Exclude. If these fields have different values, then they are overridden to their earlier values when you create a revenue arrangement for the subscription. For more information about configuring subscription items for revenue recognition, see Configuring Subscription Items for Revenue Recognition. For information about creating the prerequisite parts of a subscription, see SuiteBilling Management.
There are two Charge Frequency options when for the price book's prepay line:
-
Auto-Refill – NetSuite generates another prepayment when the minimum balance is reached. You set the prepay amount and prepay minimum balance in the price plan. For more information, see Creating Price Plans.
-
One Time – If the prepay amount is used up, NetSuite switches you to pay-as-you-go. As usages are recorded, they are added to the corresponding usage elements, without involving the prepay element. This causes an increase in the sales amount on the usage elements, which are then directly billed.