Revenue Recognition Rules for SuiteBilling

Note:

The information in this topic applies regardless of whether you check the Create Revenue Elements for Subscription Revisions accounting preference except where the accounting preference is clearly identified.

NetSuite has the following default revenue recognition rules for SuiteBilling. You select revenue recognition rules on the item record. For more information, see Configuring Subscription Items for Revenue Recognition and Creating Items for Subscription Plans.

The following table shows the revenue recognition rules that correspond to the rate plans of the subscription line types:

Subscription Line Type	Revenue Recognition Rule
Recurring – Adjustable	Depends on the state of the Create Revenue Elements for Subscription Revisions accounting preference: When clear, use Default Adjustable Recurring Fee When checked, use Default Fixed Recurring Fee
Recurring – Fixed	Default Fixed Recurring Fee
One Time	Default Fixed Recurring Fee
Usage	Default Usage
Commit Plus Overage	Commitment: Default Adjustable Recurring Fee – When revenue should be spread evenly but be based on each usage event Default Fixed Recurring Fee – When revenue should be spread evenly regardless of the usage events created Default Usage – When revenue should recognize only when a usage event has been created or is being consumed at the end of each period Overage: Default Usage

You can change the names of these default revenue recognition rules but not their settings. The default values for these fields are listed in the following table. For more information about the revenue recognition rules, see Revenue Recognition Rules.

Revenue Recognition Rule	Recognition Method	Amount Source	Rev Rec Start Date Source	Rev Rec End Date Source
Default Adjustable Recurring Fee	Straight-line, prorate first & last period (period-rate)	Event-Percent based on amount	Subscription Event Start Date	Subscription Event End Date
Default Fixed Recurring Fee	Straight-line, prorate first & last period (period-rate)	Event-Percent based on amount	Revenue Element Start Date *	Revenue Element End Date *
Default Usage	Straight-line, prorate first & last period (period-rate)	Event-Percent based on amount	Event Date	Event Date

*

To generate revenue plans using these values, you usually enter the Start Date and End Date in the revenue element. However, when the revenue element source is a subscription, these dates are automatically derived from the subscription lines. If the source is an evergreen subscription, there is not an end date, so the Estimated Revenue Recommended End Date field on the subscription header is used as the end date.

None of the default revenue recognition rules for SuiteBilling use Event-Percent based on quantity as the amount source. This amount source is not suitable for SuiteBilling.

When the credit memo does not contain a linked subscription charge, the revenue recognition rule for the item record is ignored. Instead, Advanced Revenue Management (Essentials) uses the rule you select with the Default Standard Revenue Recognition Rule accounting preference to generate the revenue plan for the credit memo line. For information about accounting preferences for revenue recognition, see Setting Advanced Revenue Management (Essentials) Preferences.

Usage service line types do not create revenue plans until the bill run executes because usage is not calculated until the rating engine has run. Forecasting and reforecasting are not supported for subscription lines with usage. For information about reforecasting, see Recalculating Revenue Forecast Plans.

Related Topics

• Revenue Recognition for SuiteBilling
• Configuring Subscription Items for Revenue Recognition
• Revenue Allocation for One-Time and Recurring Subscription Lines

Recognition Treatment Rules for SuiteBilling

A recognition treatment rule defines the criteria that must match on a revenue element before NetSuite applies the recognition treatment. Each recognition treatment rule must specify a recognition treatment. The treatment rule lookup process evaluates the rules to determine whether to apply a recognition treatment to a revenue element.

For each treatment rule, the criteria can be defined by the following subscription line types:

• Commit

• Overage

• One-Time

• Recurring

• Usage

When the treatment rules are set up, the item setup is overridden if the criteria match for each revenue element generated allowing for different treatment rules between each type of element generated.

Note:

When using commit plus overage subscription line types, it is key to use treatment rules with any rule except default usage.

Commit Plus Overage Charges

You can use the commit plus overage line type to charge in advance for x number of committed usage units per period at a specific price. Any additional units over the committed quantity at are charged at a different price as overage.

The commitment charge period and overage charge period can be different, such as an annual commitment with monthly overage. Overage cannot have a charge period greater than the commitment charge period.

Commit plus overage arrangements can be prospectively merged when using delta element functionality.

General Notices