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Co Author:@Narinder_Hartala
In this blog, you will see posting logic for Event-Based Revenue Recognition for Service with Advanced Execution with Revenue Recognition Method 4 - Recognise revenue on a time and expense-based invoice simulation where accrued revenue is created based on the pricing for time & expense items, and invoices are posted to deferred revenue.
First, let's look at the Integration between Service, Finance, and Maintenance Management.
As you can see with Advance Execution, the Maintenance order is automatically created and link with Service Order Item.
The time confirmation will be done through Maintenance Order and post to Finance. Event-Based Revenue Recognition is also posted in Finance.
Now, let's look at the Posting Schema in details:
As mentioned, we will focus on Method 4 - Recognise revenue on a Time and Expense-based invoice simulation in this blog.
Assume that the following parameters are defined for your execution order item:
Planned costs: EUR 688.50
Cost of services: EUR 675
Cost of components (material needed to perform operations): EUR 13.50 for the material associated with operation “Perform insulation”
Activity allocation
Inspect pump: 5 h
Perform insulation: 3 h
Take recordings: 1 h
Cost rate for service delivery: EUR 75/h
Total amount to be billed: EUR 688.50
Total net value of the service: EUR 795
The following graphic shows you how the posting logic for the underlying revenue recognition method works. Find detailed descriptions below.
Configuration:
For this method, the Revenue Recognition key is CCOTM
CCOTM: Allows you to recognise revenue on a time- and expense-based invoice simulation (Dynamic Item Processor) where accrued revenue is created based on the pricing for time & expense items, and invoices are posted to deferred revenue (corresponds to revenue recognition method 4).
Assign this Recognition Key to Service Document (Item Category)
System Demo:
Create Service Order
Event-Based Revenue Recognition supports the following billing relevancies:
- Itemized Billing (with revenue recognition method 4 or 15)
- Billing on Completion (with revenue recognition method 3 or 15)
- Billing via Billing Plan After Release
After Service Order created and Release, Maintenance Order is automatically created and link to Service Order Item
Time confirmation on PM Order
At this point, Time confirmation is done but the billing is not yet created.
Let's look at EBRR posting
Service Order Plan / Actual Report show the Accrued Revenue (B/S), Revenue Adj (P&L) posting from EBRR and then Actual Cost (P&L) from the time confirmation.
Now, let's create Resource Related Billing Request
Create billing
After Post billing, display the Accounting Document
Revenue posted to 41000000 account.
Now let's go back and check the EBRR again
We have Billed Revenue posted now in Blue
Service - Plan / Actuals App
We can see that the Revenue 41000000 and Actual Cost 94311000 are reflexed correctly. The Accrued Revenue (13711400) is offsetting with Deferred Revenue (13701400).
Last step, we can schedule background job to clear the EBRR posting.
For this blog, we will scope just 1 service document that we are testing.
After job is completed, check the spool that there is no error.
Last step, go back and display the Service Plan / Actual again.
The Accrued Revenue (13711400) and Deferred Revenue (13701400) are now cleared out and it looks cleaner in the report.
For all Revenue Recognition Methods for service with advance execution, please visit SAP Help
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