In this topic, you will learn how to better understand Revenue plans.
Steps:
A contract can consist of multiple contract lines with complex and diverse revenue recognition requirements. In PeopleSoft Contracts you assign each product to its own contract line and then associate each contract line with its own set of accounting distribution codes.
Step 1You then associate each contract line, for which PeopleSoft Contracts manages revenue, with a revenue plan. Revenue plans store the timing of revenue recognition, as well as any notes relating to individual revenue plan events. You can assign contract lines with similar revenue recognition requirements to the same revenue plan. When PeopleSoft Contracts manages revenue, each contract has at least one revenue plan, and it may have more.
Step 2Revenue plans are often made up of a series of dated revenue recognition events that are associated with percentages or amounts.
Step 3The percentage or amount reflects how much of the contract line’s negotiated amount will be recognized upon a certain date, milestone, or user-initiated action.
In this example, $640,309.92 will be recognized over a number of uniquely-defined time segments with a percent applied to each period.
Step 4Revenue recognition methods define the criteria that must be met before revenue can be recognized. In PeopleSoft Contracts, you specify revenue recognition methods for products on the Product Definition component. The associated revenue recognition method appears when you select a product onto the contract line.
Step 5PeopleSoft Contracts supports four methods of revenue recognition: As Incurred, Apportionment, Percent Complete, and Milestone.
An additional method is Billing Manages Revenue. You never associate the Billing Manages Revenue method with a plan because it indicates that PeopleSoft Billing, and not PeopleSoft Contracts, manages the revenue.
Step 6Should a revenue plan be tied to more than one contract line, then the amount that is recognized for each event is based on the sum of negotiated amounts of all contract lines associated with that revenue plan.
Step 7You can optionally select revenue plan templates to automate the creation of revenue plans on your contract. You can also associate events with your revenue plan template depending on your plan method.
Step 8Revenue plan templates are created on the Billing/Revenue Plan Templates page.
Templates enable you to define the basics of the billing plan or revenue plan, and then associate the templates with the products.
After you create a contract and select products that are associated with templates, the system automatically creates a billing and revenue plan for you, combining contract lines according to the methods and price types that are associated with the products.
Using revenue and billing plan templates is optional, but they enable you to automate much of the billing and revenue on plan setup that is required for contract lines.
Step 9Congratulations, you have successfully gained an understanding of revenue plans.