Accrual

Oracle Revenue Management and Billing enables you to calculate and create accrual for accounts. An accrual allows an entity to record expenses and revenues for which it expects to expend cash or receive cash, respectively, in a future reporting period.

The accrual is an adjustment which is created for the following:

  • Revenues that have been earned but are not yet recorded in the books of accounts.

  • Expenses that have been incurred but are not yet recorded in the book of accounts.

The system also enables you to reverse the accrual for accounts. You need to define whether the accounts belonging to a division are eligible for accrual or not. If a division is eligible for accrual, by default, all accounts belonging to the division are eligible for accrual. However, you can exclude an account from accrual, if required. To enable the accruals feature, you need to define the following:
  • Accrual Cycle - You must specify the following information in the accrual cycle:

    • Dates when accrual should be calculated and created for the accounts where the accrual cycle is defined.

    • Accrual reversal period for each accrual date.

    If a division is eligible for accrual, you need to specify the accrual cycle for the division. By default, all accounts belonging to a division will inherit the accrual cycle of the division. However, you can override the accrual cycle of an account
  • Accrual Type - You must specify the following information in the accrual type:

    • Type of the accrual object that you want to create for posting the accrual amount. At present, the product enables you to create adjustments to record accruals for accounts in the system.

    • Whether you want to calculate the accrual based on the historical or actual data. If you want to calculate the accrual based on the historical data, you need to specify the number of historical bills that you want to consider for accrual calculation. The system will only consider the completed historical bills during accrual calculation. Besides specifying the historical bill count, you also need to specify the type of day (i.e. Business Day or Calendar Day) which is used to calculate the accrual amount. However, if you want to calculate the accrual based on the actual data, you need to specify whether trial bill or unbilled pass through billable charges created through the Transaction Feed Management process should be considered to calculate the accrual amount.

    • Whether you want to calculate accrual at the bill or bill segment level.

    • Cancel reason that you want to use while reversing the accrual

    • Algorithms that you want to use during the accrual calculation, creation, and reversal

    • Whether any objects, such as adjustments created using a particular adjustment type, bill segments created for a particular price item, or adjustments' or bill segments’ financial transactions where a particular distribution code is used, must be excluded during the accrual calculation.

    • Divisions to which you want to associate the accrual type.

The accrual process includes the following sub-processes:

  • Accrual Calculation - In this process, accounts that are eligible for accrual will have its accrual amount calculated on the basis of the accrual type configuration.

  • Accrual Creation - In this process, on the basis of the calculated accrual amount and information configured on the accrual type, the accrual adjustment will be created.

  • Accrual Reversal - In this process, reversal of accrual adjustments will be done to prevent double posting of revenue, once billing is done. On the basis of the accrual reversal schedule, an account with accrual adjustments will be selected for accrual reversal processing. For every frozen adjustment, a cancellation is done in order to reverse journal entries.

During the accrual process, an accrual goes through various statuses in its lifecycle. You can execute accrual process either using user interface (UI), or batch. For more information about the accrual statuses, see, Accrual Created through UI (Without Approval) Status Transition, Accrual Created through UI (With Approval) Status Transition, Accrual Created through Batch (Without Approval) Status Transition, and Accrual Created through Batch (With Approval) Status Transition

Note that the lifecycle of an accrual is driven by the business object using which the accrual is created. An accrual business object named C1_​ACCRUALS is shipped with the product. The accrual feature explained in this document is articulated based on the lifecycle and logic defined in the C1_​ACCRUALS business object.

Related Topics

For more information on... See...
Accrual Cycle screen Accrual Cycle (Used for Searching)
Accrual Cycle screen Accrual Cycle (Used for Viewing)
Accrual Type screen Accrual Type (Used for Searching)
Accrual Type screen Accrual Type (Used for Viewing)
Accrual screen Accrual (Used for Searching)
Accrual screen Accrual (Used for Viewing)

Parent Topic: Oracle Revenue Management and Billing Financial Services Business Processes