Revenue Arrangement Management

A revenue arrangement is a non-posting transaction that records the details of a sale for purposes of revenue allocation and recognition. The revenue arrangement is initially created 3 hours after the source document if the Revenue Arrangement Update Frequency preference is set to Automatic. See Setting Advanced Revenue Management (Essentials) Preferences.

NetSuite creates revenue arrangements for the following types of transactions. If the transaction is subject to approval, the revenue arrangement is created only after the transaction is approved.

Sales orders
Invoices not created from sales orders
Cash sales
Cash refunds
Return authorizations
Credit memos

When you add new line items to the following transaction workflows, new revenue arrangements are created only for those added line items:

Invoices created from sales orders
Cash sales created from sales orders
Credit memos created from return authorizations
Cash refunds created from return authorizations

When the above transactions are the source for a revenue arrangement, the revenue arrangement is listed on the transaction’s Related Records subtab. The revenue arrangement amount in the Related Record is in the base currency, which may be different from the transaction currency. When Multi-Book Accounting is enabled, the revenue arrangement listing includes a column for the accounting book.

Encourage those users who enter sales transactions for revenue recognition to use non-posting discount items to record discounts, rather than negative quantities or amounts. For information, see Discount Items. To record returns, use return authorizations. Then merge the positive and negative revenue arrangements. For information, see Combination and Modification of Performance Obligations.

Revenue arrangements may be created directly from projects and subscriptions. If you selected a Project and Charge Type on any of the following transactions, then a corresponding revenue arrangement is not created for that transaction. Instead, the transaction's performance obligations appear on the project's revenue arrangement.

Sales orders
Invoices
Cash sales
Credit memos

Do not select a charge type on the transaction if you do not want the transaction's performance obligations to appear on the project's revenue arrangement. For more information and instructions, see Project Revenue Recognition and Revenue Recognition for SuiteBilling.

You can also create revenue elements and arrangements from approved journal entries by selecting a revenue recognition rule for the journal entry. For more information, see Creating Revenue Elements from Journal Entries.

Revenue elements and arrangements are not created for memorized transactions until the transactions are posted or processed if the transaction is non-posting.

Each revenue arrangement initially consists of a transaction header and at least one revenue element line in the Revenue Elements subtab. The revenue element corresponds to a performance obligation, such as a line in a sales transaction. It is a separate record that includes links to the revenue recognition information necessary to account for the revenue from the original contract. When a revenue arrangement is updated, the update incorporates changes to sources that affect revenue management.

A warning message displays on revenue arrangements that have one or more elements that require a revenue recognition plan update. If this warning displays, you should update your revenue recognition plans. For information about updating revenue recognition plans, see Updating Revenue Recognition Plans.

All revenue arrangement and revenue element fields are available for search.

When revenue is deferred for billable costs, the billable items are included in revenue arrangements as revenue elements. The defaults for billable items are derived from the item record as usual. Billable expenses are included only if the expense account has an income account selected in the Track Billable Expenses in field. The income account must have a deferred revenue type deferral account. The default Allocation Type for all billable costs is Exclude. For more information, see Deferring Revenue for Billable Costs.

See the following topics for information about managing revenue arrangements:

For information specific to revenue allocation, see Advanced Revenue Management (Revenue Allocation).

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