Create Revenue Methods
Create revenue methods to determine how revenue amounts are calculated for contracts.
The following sections describe how you create revenue methods.
Entering Basic Revenue Method Information
To create a revenue method:
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Click , and search for the Manage Revenue Methods task.
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Click the Manage Revenue Methods link.
Use the Manage Revenue Methods page to create revenue methods and to review, edit, or delete revenue methods.
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Click the Create icon to create a revenue method.
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On the Create Revenue Method page, enter a revenue method name.
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Specify a status. Select Active to make the revenue method available for use.
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The following table lists the revenue method classifications from which you can select one to determine the basis for calculating revenue amounts for transactions on contracts or contract lines.
Revenue Method Classification
Description
Amount Based
Recognize revenue as billing events are completed.
As Billed
Recognize revenue as customers are invoiced, using a common set of bill rates, a burden schedule, or transfer pricing for both invoicing and revenue.
As Incurred
Recognize revenue as costs are incurred, using a revenue-specific set of bill rates, a burden schedule, or transfer pricing for both invoicing and revenue.
Percent Complete
Recognize revenue based on project progress of a contract line or associated project.
When you select the Percent Complete revenue method classification, the Percent Complete billing extension is automatically added to the revenue method. The extension automatically creates a billing event with the percent spent revenue amount for a contract line, or for the project associated to the contract line.
Percent Spent
Recognize revenue as progress is calculated, based on actual cost to date over budget cost.
When you select the Percent Spent revenue method classification, the Percent Spent billing extension is automatically assigned to the revenue method. The extension automatically creates a billing event with the percent spent revenue amount for a contract line.
Rate Based
Recognize revenue as costs are incurred, using a revenue-specific set of bill rates, a burden schedule, or transfer price rates.
Use this revenue method classification if you are using a fixed price for invoices, or if you require different burden schedules for invoices and revenue. You can also use this revenue method classification if the invoice method classification for a bill plan on the same contract line is percent complete or percent spent.
Note: You can use a revenue method with the As Billed or As Incurred revenue method classification only when combined with an invoice method that has the Rate Based invoice method classification. In this situation, the bill rate, burden, or transfer price schedule type selected for that invoice method is used for both invoicing and revenue recognition. -
To enable a revenue method for intercompany billing only, select the Use Revenue Method for Intercompany Billing check box. Use revenue methods with this option to track internal business activity between legal entities within your enterprise. Deselect the check box if the revenue method is used for billing external parties.
Defining Rate Sources
If the revenue method classification is Rate Based, then you must select one of the following schedule types on the revenue method for both labor and nonlabor rates.
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Bill rate
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Burden rate
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Cost reimbursable
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Transfer price (available if you are using the revenue method for intercompany billing)
Assigning Billing Extensions
Use the Billing Extension Assignment section to add a billing extension to a revenue method. In such a situation, contract lines that use revenue plans associated with the revenue method use the billing extension to calculate revenue amounts.