Enterprise Resource Planning Blogs by Members
Gain new perspectives and knowledge about enterprise resource planning in blog posts from community members. Share your own comments and ERP insights today!
cancel
Showing results for 
Search instead for 
Did you mean: 
Jitakshi_Sarmah
Explorer
In this blog post I will be focusing on SAP Revenue accounting and reporting (RAR) Use Case for Event-Based Fulfillment - Goods Issue as well as Time-Based Fulfillment of Performance Obligations. A performance obligation (POB) can be fulfilled when a specified event happens which is Event-Based Fulfillment. A performance obligation can be fulfilled over a period of time which is Time-Based Fulfillment.

Performance Obligation Types


The goods or services that are promised in the contract represent a single performance obligation. SAP RAR has performance obligation types, and this represents data which addresses queries on fulfillment type; if it is Time or Event Based, and also specifies about the duration.

IMG Path - Financial Accounting -> Revenue Accounting -> Revenue Accounting Contracts -> Define Performance Obligation Types


Configuration Of POB Types



Fulfillment Event Types 


Performance obligations can be fulfilled on the occurrence of an event. They can also be fulfilled over a period of time, starting from the occurrence of such an event.

IMG Path - Financial Accounting -> Revenue Accounting -> Revenue Accounting Contracts -> Define Fulfilment Event Types


Fulfilment Event Types



Goods Issue and Time Based


One can fulfill performance obligations (POBs) upon goods issue.

Time-based fulfillments for performance obligations involve subscriptions, for example contracts, where services are provided on a regular basis for the duration of the contract.

How the Goods Issue Process Is Integrated in Sales and Distribution with Revenue Accounting?



  1. The revenue accounting contract is created based on the sales order.

  2. When goods issue is triggered, a fulfillment event is triggered. Revenue accounting generates revenue and cost recognition postings using the actual quantity of goods issue as the fulfillment quantity.

  3. The cost of goods sold (COGS) is posted in the operational system, based on goods issue. The COGS is then corrected in Revenue Accounting.


Use Case


Company enters into a contract with customer (17100003) for 30,000 USD for providing Hi-Tech Equipment (TG11) together with Consumable Spare Parts (TG12) and Warranty (SM001) of during contract validity from 14th October 2022 to 17th February 2023 (4 months).





















































Items Qty SO Rate Standalone Sales Price Contractual Price Total SSP Allocated Amount Allocation Effect
TG11 1 27,000 20,000 27,000 20,000 27,272.73 272.73
TG12 5 500 340 2,500 1,700 2,318.18 (181.82)
SM0001 1 500 300 500 300 409.09 (90.91)
Total 30,000 22,000 30,000 0

Calculation Check Points:

  • Allocated Amount = Standalone Selling Price of Item X Complete Contractual Price / (Sum of all Stand-Alone Selling Price (SSP))

  • Allocation Effect = Allocated Amount – Contractual Price of Item


Step 1: Value Contract

Value Contract is created with materials & services associated with agreement.


Value Contract


Step 2: Sales Order

With reference to value contract further Sales Order is created and condition type PPR0, Standalone Sales Price (SSP) will be manually updated at every item level for testing but without SSP system will not save the Sales Order.


Sale Order


Step 3: Process Revenue Accounting Item’s related to Sales Order                            (Step 1)

For many entities, Step 1 will be straight forward; the key point is to determine when a contract exists. Using Tcode FARR_RAI_MON or Fiori App Manage Revenue Accounting Items, all sales order items will be showcase initially as processable RAI’s. Then all such processable RAI’s are transferred using default sender integration component as SD with RAI class as SD01 with source document item type as SDOI to RAR.


View RAR Contract and Performance Obligations (POB’s)                                             (Step 2)

Through Tcode FARR_RAI_MON or Fiori App Manage Revenue Accounting Items, all sales order items will be showcase initially as processable RAI’s. Such processable RAI’s are further transferred collectively or individually transfer to RAR. Once RAI’s are processed successfully, in 1st step system will automatically create one Revenue Recognition Contract 1000000300 against one Sales Order and in 2nd step Performance Obligations 2000003000/01/02 for each Sales Order items.


RAR Contract – Price Allocation                                                                                       (Step 3, 4)

As per IFRS 15 prerequisite, RAR component will automatically perform the allocation amount and allocation effect against each Performance Obligation. This determines transaction price and allocate to the separate POB’s level.


RAR Contract – Revenue Schedule (Before Fulfillment)

RAR Contract will calculate detail revenue schedule with status of each POB’s fulfillment type and status.

Step 4: SD – Outbound Delivery and Post Goods Issue

With reference to Sales Order, Outbound Delivery and PGI done for material relevant order items.


Step 5: Process Revenue Accounting Item’s related to Fulfillment

In transaction FARR_RAI_MON or Fiori App Manage Revenue Accounting Items, All fulfillment items related to order will be showcase initially as processable RAI’s. Then all such processable RAI’s are transferred using default sender integration component as SD with RAI class as SD02 with source document item type as SDFI to RAR.


RAR Contract – Revenue Schedule (After Fulfillment)                                                 (Step 5)


This is the final step to determine for each POB when revenue should be recognized. Revenue is recognized when POB is fulfilled – that is when goods are posted or services are eligible for post. The system records costs and recognizes revenue based on allocated amounts. The goods issue posting triggers real time creation of the revenue entry recording contract asset based on the allocated revenue. The solution is based on the Universal Journal and provides real time information on the data at point of time.


Step 6: Customer Billing

Customer billing will be posted.


Step 7: Process Revenue Accounting Item’s related to Billing

In transaction FARR_RAI_MON or Fiori App Manage Revenue Accounting Items, All Invoice Items related to billing will be showcase initially as processable RAI’s. Then all such processable RAI’s are transferred using default sender integration component as SD with RAI class as SD03 with source document item type as SDII to RAR.


Summary of RAR Contract – Revenue Schedule (After Fulfillment)

In transaction FARR_RAI_MON or Fiori App Manage Revenue Accounting Items, RAR Contract details will be displayed with all information related to Order Items, Fulfillment Items and Invoice Items.


In October we can see 25% completion of the Service Item


In November we can see 50% completion of the Service Item


Service item will be 100% completed by the end of contract period which is 4 months in this case.

We can also see the document flow in Fiori App – Manage Revenue Contracts as below:


This brings us to end of test case of RAR Use Case for Event-Based Fulfillment - Goods Issue as well as Time-Based Fulfillment of Performance Obligations.


 

Hope you find this blog informative and helpful.


Please do follow the SAP S/4HANA environment Topic page (here) for more such informative blogs on various topics.


Thanks,

Jitakshi
3 Comments