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To set up phased revenue recognition, you need to:
- Go to Administration > General Settings >
enable - Enable Phased Revenue Recognition.
- Access the specific contract > Terms tab > activate Phased Revenue Recognition
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On the Main tab, you can enter general information such as the customer, contract, project, and other relevant data. Key fields include:
- Company: Select the customer for whom the document is created.
- Contract: Automatically populated with the default contract for the selected company.
- Project: Linked to a project if Project Costing is enabled.
- Customer Order: Linked automatically if associated with a customer order.
- Entity: Select the legal entity if multi-company accounting is used.
The Revenue and Costs tab helps list and manage items for which revenue is recognized, focusing on two main areas:
Services Pane: This section lists works and services for the contract, including item properties like quantity, price, and discounts. You can manage manual and automatic discounts, apply VAT, and track recognized revenue and costs.
- Key fields: Item, Quantity, Price, Discount, Current-Phase Revenue.
- The fill button helps populate the Work Costs table.
Work Costs Pane: Displays costs associated with the listed services, allowing tracking of costs in phases.
- Subtabs: WIP shows current costs and Costs Recognized for Previous Phases shows costs recognized in prior phases.
- Key fields: Cost Object, Cost Element, GL Accounts, Amount (Cur.).
You can add items, apply discounts, calculate VAT, and specify project-related details. The pane helps match revenue to the incurred costs for the current phase of the project
The Revenue and Costs tab is a critical component for managing revenue recognition. This tab allows us to handle both the revenue and the associated costs for the work items in a phased manner. The tab consists of two main panes: Services and Work Costs.
The Services Pane allows adding and managing Work/Service items with details like quantity, price, discounts, VAT, and optional characteristics. Additionally, some more fields need to be filled i.e.
Already Recognized: The Already Recognized Quantity and Already Recognized Revenue columns show the revenue and costs recognized in previous phases. You can access more details in the Costs Recognized for Previous Phases tab if necessary.
Revenue Recognition Percent: Specifies the percentage of total revenue to be recognized in the current phase.
Cost Details: The Total Cost and Already Recognized Costs columns show the costs associated with the work, including previous recognitions.
The Pick Work Costs dialog box in the Phased Revenue Recognition process allows you to manually select costs associated with a work item for recognition .
Structure of the Dialog Box:
Work in Progress (Upper Pane):
- Displays all costs related to the selected work item.
- Costs are filtered by Cost Object, Department, or specific search criteria.
- You can refresh the list to reflect changes made by other users.
Selected Work in Progress (Lower Pane):
- Displays the costs you have selected from the Work in Progress list.
- You can use Up and Down buttons to reorder the selected costs.
The Additional Information tab in the Phased Revenue Recognition (create) form allows you to add supplementary details for the revenue recognition document. There are no mandatory fields, but you can specify the following:
- Department: Identify the department responsible for the work related to the customer contract.
- Responsible: Select the employee accountable for the revenue recognition at this specific stage.
Exchange Rate Options:
- Use Exchange Rates Defined on the First Recognition Date: If selected, the exchange rates from the first Phased Revenue Recognition document for the contract will be used for subsequent entries, even if the document date differs.
- If not selected: The exchange rate on the document date will be applied.
Note: The option regarding exchange rates is controlled within the customer contract, not directly in this formmanually.
Finally, issue a final invoice once all contract phases are complete to claim the total revenue recognized throughout the contract's duration.
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