Discovering Event-Based Revenue Recognition

Welcome to your journey through SAP's Event-Based Revenue Recognition (EBRR) solutions! Before we dive into the details, let's get a high-level overview of what to expect. SAP's revenue recognition portfolio includes key elements like Event-Based Revenue Recognition, supported SAP Fiori applications, and compliance with IFRS and US-GAAP standards. These systems work together to ensure accurate and timely financial reporting for project-based services.

Our focus will be on EBRR, covering its configuration, process steps, methods, and compliance with accounting standards. You'll learn how EBRR handles real-time revenue and cost adjustments for fixed price, time and material, and periodic service type projects. We'll explore the roles of project managers and controllers, who are critical in managing service activities efficiently.

As we explore EBRR, pay attention to the key concepts like double journal entries, the importance of period-end runs, and the specific events that trigger revenue recognition. We'll discuss the various methods of revenue recognition, such as cost-based and time-based, and how they apply to different project types. Understanding the configuration settings and tables, as well as the supported SAP Fiori applications like Event-Based Revenue Recognition - Projects and Display Project WIP Details, will help you grasp the full scope of SAP's revenue recognition solutions.

This high-level introduction sets the stage for a deeper dive into each component and its functionalities. You'll also get a chance to understand how the system manages generally accepted accounting standards like IFRS and US-GAAP, and the significance of these standards in financial reporting.

Learn about Event Based Revenue Recognition such as Real-Time Financial insights, Revenue and Cost Adjustments.

The figure demonstrates an overview of the process flow of the Event-Based Revenue Recognition (1IL) scope item.

Event based Revenue Recognition calculates and posts real time revenue and cost adjustment for professional services for fixed price, time and material, and periodic service type projects. Processes that do not write a financial line item do not result in any real time revenue recognition postings (for example, changes of plan data do not directly result in revenue recognition postings) although some of these processes affect the recognition of revenue (for example, changes in plan data affect POC calculation and therefore the recognized revenue).

Period end closing postings (periodic revenue recognition) recalculates the recognized revenue considering all available data at the end of the period and adjusts the recognized revenue that was calculated in real time during the period based on events and on a "best guess" basis. Complete and final figures are then available after period end closing.

Batch processes are provided to review can automatically correct errors that may happen in the real time calculation of revenue and related financial postings due to a variety of factors.

The main principle supporting real time revenue recognition is the double journal creation in the system. All postings considered events for EBRR automatically generate a parallel revenue recognition posting in finance:

Events that trigger recognition of revenue include:

• Time postings via CATS
• Activity allocations (not created from CATS)
• Expense postings
• Billing
• Period-end runs

• Execute event-based revenue recognition for projects.

• Adjust revenue recognition.

• Report project actual data.

• Report project WIP details (relevant only for time and material projects).

• Change the underlying method of revenue recognition significantly (available in SAP S/4HANA).

• Adjust for imminent loss, anticipated sales deductions, and unrealized costs.

• Run a simulation to view important project KPIs via semantic tags.

• Ensure correctness of posted values after period-end closing, with no separate settlement required.