Advanced Revenue
Management (Essentials)
Barcelona, Peaches Ann
March 20, 2024
Copyright © 2024, Oracle and/or its affiliates | Confidential: Internal/Restricted/Highly
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Revenue Management
1 Define Revenue Recognition
2 Order to Revenue Workflow
3 Basic Terminologies
4 Enabling ARM and set-up
Copyright © 2024, Oracle and/or its affiliates | Confidential: Internal/Restricted/Highly
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WHAT IS REVENUERECOGNITION?
• The revenue recognition principle is a cornerstone of accrual
accounting and the matching principle. Revenue should be posted as it is
earned, NOT when services are invoiced or paid for.
• ARM automates revenue forecasting, recognition, reclassification, and
auditing through a rule-based event handling framework.
REVENUERECOGNITION USE CASES
ADVANCED REVENUE MANAGEMENT FEATURES
Support ASC 606 Source Support FV Forecasting
(US Only) Transactions Formulas
Defer Revenue Recognition Reclassification
Order to Revenue
Workflow
ORDER TO REVENUE
WORKFLOW
Revenue
Arrangement
Sales Order
and Revenue
Plans
Deferred
Revenue
Revenue
Recognition
Reclassification
Journal Entries
Entries
REVENUE MANAGEMENT COMPONENTS AND TERMINOLOGIES
Revenue Transactions that record the details of customer performance obligations
Arrangement for purposes of revenue allocation and recognition.
Revenue Elements Records that correspond to individual lines of a source transaction
Revenue Records that define patterns for revenue recognition. They include, for
example, the recognition method, amount source, and start and end date
Recognition Rules sources.
Records that indicate the posting periods in which revenue should be recognized
Revenue and the amount to be recognized in each period. Revenue plans are derived from
Recognition Plans revenue recognition rules. Each revenue element has a forecast plan and one or
more actual plans.
Enabling Advanced Revenue Management
& Required Setup/Configuration
SETTINGUP ADVANCE REVENUEMANAGEMENT
Enable
Setup Company Accounting
Features
• The Accounting Periods feature
must be enabledas a prerequisite
for advanced revenue
management.
• When you enableadvanced
revenue management, NetSuite
automatically adds the following
system accounts:
✓ Deferred Revenue
✓ Unbilled Receivable (already exists if you have enabled
the Revenue Commitments feature)
✓ Revenue Arrangement (anon-posting account)
Revenue Recognition Related Records and its Configuration
1 Revenue Recognition Rules
2 Mapping Revenue Recognition Fields (Revenue Field Mapping)
3 ARM Preferences (Revenue Arrangement Setup)
4 Item Configuration
5 Revenue Arrangement SourceTransactions
6 Update Revenue Arrangement
7 Actual and Forecast Revenue Recognition Plans
8 Update Revenue Plans
REVENUE RECOGNITIONRULES
Revenue
Lists Accounting Recognition New
Rules
Revenue recognition rules are used to generate revenue recognition plans that determine
when and how revenue from associated items should be recognized.
For each rule, you can:
• Select from standard revenue recognition methods
• Set the time period over which revenue is recognized
• Define an offset to delay the start date and end date of revenue recognition
• Set up an initial amount to be recognized
• Select the source of the revenue recognition plan amount
• Select the trigger for plan start and end dates
• Determine how the plan is modified if the end date changes
RECOGNITION METHODS
Straight-line, byeven
periods Recognizes revenue evenly for each period
Straight-line, prorate first Recognizes equal amounts for periods other than the first and the final period.
& last period Amounts are prorated for the first period and the final period based on the number of
days in eachperiod.
Straight-line, using exact Recognizes revenue amounts individually for each period based on the number of
days days in eachperiod
Straight-line, prorate first Determines the full number of periods in the revenue plan and allocates revenue
& last period (period-rate) based on the proportional period amount
Enables you to define revenue recognition terms that include uneven periods and
Custom
amounts.
AMOUNTSOURCE
Determines the amount of the revenue recognition plan
REVENUE FIELDMAPPING
Revenue Field
Setup Accounting
Mapping
ARM Preferences
(Revenue Arrangement Setup)
Accounting
Setup Accounting
Preferences
ITEM CONFIGURATION
✓ Revenue Recognition Rule
✓ Rev Rec Forecast Rule
✓ Create Revenue Plans On
✓ Auto-Expansion for Revenue Management
✓ Direct Revenue Posting
✓ Hold Revenue Recognition
MANAGE REVENUE ARRANGEMENTS
Revenue arrangements can be created for the following types of transactions after the
transaction is approved
Sales Order Invoice Cash Sale
Return
Cash Refund Credit Memo
Authorization
DEMO
UPDATE REVENUEARRANGEMENT
Edit Revenue
Transactions Financial
Arrangements
• The Edit Revenue Arrangements page enables you to edit multiple revenue
arrangements with the click of a single Submit button. You can edit the same
revenue arrangement header fields on this page as on individual revenue
arrangements.
Actual and Forecast
Revenue Recognition Plans
• Forecast plansare
automatically
created
• Actual plans are
created whenthe
Create Revenue
Plans On event
occurs
Thank you!
