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    Janelle Azimullah
    Billing Offset process and RMCSAnswered
    Topic posted November 1, 2019 by Janelle AzimullahGold Trophy: 10,000+ Points, tagged Configuration, Financials, Help Center, Receivables, Revenue Management, Setup / Administration 
    60 Views, 8 Comments
    Title:
    Billing Offset process and RMCS
    Content:

    With an RMCS implementation, the UBR/Deferred Revenue entries are now replaced with a balance in Contract Liability and Contract Asset. That being the value of performance obligations (DR: Contract Liability) and the value of backlog/value to invoice (CR: Contract Asset).

    Please confirm, do we still need to run the Billing Offset process when using RMCS? 

    Best Comment

    Perry Unrau

    Hi Janelle,

    Oracle PPM Cloud supports two accounting models:

    1. Unbilled Receivables & Deferred Revenue.  This model uses the Create Accounting Transactions process in Project Billing to reclassify billing offset balances.  This model must be used for intercompany and interproject contracts and can be used for external project contracts.

    2. Contract Assets & Contract Liabilities [for IFRS 15 and ASC 606].  This model uses the Create Accounting Transactions process in Project Billing to accrue the performance obligation.  This model can be used for external project contracts.  Please see the PERFORMANCE OBLIGATION ACCRUAL feature in the Update 18B What's New release readiness documentation.  Please also see the png file attached that depicts the intended accounting entries for the new accounting model.

    Oracle PPM Cloud also allows users to turn off revenue accounting in Project Billing in favor of RMCS performing revenue accounting for all revenue contracts, including project contracts.  Please see the PERFORM PROJECT CONTRACT REVENUE ACCOUNTING IN REVENUE MANAGEMENT feature in the Update 18C What's New release readiness documentation. 

    If you are having RMCS perform the revenue accounting, you probably also want RMCS to record the initial performance event (essentially a debit to Contract Asset and credit to Contract Liability).  If you need more details on this, Helle is the person to answer your questions.  That just leaves the question about the Create Accounting Transactions process in Project Billing. 

    Presuming you want RMCS to record the initial performance event, if you don't have intercompany or interproject contracts, you don't have to run the Create Accounting Transactions process in Project Billing at all.  If you do have intercompany and/or interproject contracts, run the process but ensure you specify the Billing Type as Intercompany or Interproject, as appropriate.  Not running it for the External Billing Type will avoid the creation of Project Billing accounting transactions with a transaction type of Performance Obligation Accrual. 

    If you actually want Project Billing to accrue the performance obligation in GL (different terminology, but again essentially a debit to Contract Asset and credit to Contract Liability), then you just need to run the Create Accounting Transactions process in Project Billing with the Billing Type set to External and then the Create Accounting process in Project Billing.  Please note, Project Billing accounting transactions are NOT currently interfaced to RMCS.

    Perry

     

    Comment

     

    • Helle Hennings

      Hello Janelle,

       

      Please refer to my response given in a prior Cloud Customer Connect Post here:

      https://cloudcustomerconnect.oracle.com/posts/b01b49b7f2

      I explained how AR processes the accounting entries and how RMCS processes the accounting entries.

      A new worldwide accounting standard ASC 606 (and IFRS 15) for Contracts from Revenue with Customers became effective for public companies with fiscal years starting from Jan 1, 2018 and for private enterprises from Jan 1, 2019.

      The new accounting standard is a revenue reform and is all about reviewing the accounting contract at inception e.g. looking at all sales  cycle data at inception which could be sales orders, service contracts, project contracts and the like.

      The new accounting standard completely separates billing from revenue recognition.

      Revenue Management Cloud is a product you can subscribe to and implement to help you address ASC 606.

      For more information refer to Revenue Management information refer to:

      Past recording on Cloud Customer Connect such as:

      ERP – Cloud Cafe February 2018: The New Revenue Recognition Standard here: https://cloudcustomerconnect.oracle.com/posts/6a4b5ee63c

      You can scroll down the page to listen to the recording and download the presentation via:

      Replay:

      Streaming Recording

      Event File:

      RMCS_OCC_2018'02'20.pdf (1.5MB)

      There are a number of Oracle University recordings made by my colleague Seamus Moran, senior director Financials development, available free of charge about the Revenue Recognition Standard and how Revenue Management Cloud enables you to address the new accounting standard:

      https://learn.oracle.com/pls/web_prod-plq-dad/db_pages.getpage?page_id=912&get_params=cloudId:243,p_searchWords:seamus%20moran

      Review the Quick Tour guide here: https://go.oracle.com/LP=43623?qt=saas_erp_revmgmt_ManageASC606IFRS15RevenueRecognition&src1=ow:occ:feb

      Also a bit of feature write up here: https://cloud.oracle.com/en_US/financials-cloud/features

      As well as the Revenue Management user guide here: https://docs.oracle.com/en/cloud/saas/financials/19d/fafrm/using-revenue-management.pdf

      Best regards,

      Helle

    • Helle Hennings

      Is your question related to Fusion Project Blling Offset?

      Regards,

      Helle

       

       

      • Janelle Azimullah

        Yes, specifically does the Billing Offset process still need to take place when implementing RMCS?

        If RMCS is not implemented, this would be standard process in PPM run at period end. 

        Do you want to transfer this to the PPM Forum?

    • Helle Hennings

      Janelle

      No it's fine to leave your question here. I'll ask a colleague of mine with the PPM Cloud knowledge (and RMCS integration knowledge) to review and respond.

      Best regards,

      Helle

    • Perry Unrau

      Hi Janelle,

      Oracle PPM Cloud supports two accounting models:

      1. Unbilled Receivables & Deferred Revenue.  This model uses the Create Accounting Transactions process in Project Billing to reclassify billing offset balances.  This model must be used for intercompany and interproject contracts and can be used for external project contracts.

      2. Contract Assets & Contract Liabilities [for IFRS 15 and ASC 606].  This model uses the Create Accounting Transactions process in Project Billing to accrue the performance obligation.  This model can be used for external project contracts.  Please see the PERFORMANCE OBLIGATION ACCRUAL feature in the Update 18B What's New release readiness documentation.  Please also see the png file attached that depicts the intended accounting entries for the new accounting model.

      Oracle PPM Cloud also allows users to turn off revenue accounting in Project Billing in favor of RMCS performing revenue accounting for all revenue contracts, including project contracts.  Please see the PERFORM PROJECT CONTRACT REVENUE ACCOUNTING IN REVENUE MANAGEMENT feature in the Update 18C What's New release readiness documentation. 

      If you are having RMCS perform the revenue accounting, you probably also want RMCS to record the initial performance event (essentially a debit to Contract Asset and credit to Contract Liability).  If you need more details on this, Helle is the person to answer your questions.  That just leaves the question about the Create Accounting Transactions process in Project Billing. 

      Presuming you want RMCS to record the initial performance event, if you don't have intercompany or interproject contracts, you don't have to run the Create Accounting Transactions process in Project Billing at all.  If you do have intercompany and/or interproject contracts, run the process but ensure you specify the Billing Type as Intercompany or Interproject, as appropriate.  Not running it for the External Billing Type will avoid the creation of Project Billing accounting transactions with a transaction type of Performance Obligation Accrual. 

      If you actually want Project Billing to accrue the performance obligation in GL (different terminology, but again essentially a debit to Contract Asset and credit to Contract Liability), then you just need to run the Create Accounting Transactions process in Project Billing with the Billing Type set to External and then the Create Accounting process in Project Billing.  Please note, Project Billing accounting transactions are NOT currently interfaced to RMCS.

      Perry