Revenue recognition for projects is automatically run, in real time, every time a financial posting considered as an event (affecting project revenue) takes place.
The application Event-Based Revenue Recognition – Projects is nonetheless necessary for Project Managers and Controllers to verify the revenue situation of the project work packages (billing elements to be more precise) at any time, and to run the recognition of revenue, considering all available data including non-events, at period-end closing.
Users first select the projects for analysis when the application is run. Filters can be predefined for the users to see, for example, only projects they are responsible for.
After a billing items is selected, the revenue recognition detail screen is displayed:
With this app, costs and revenues associated with project based transactions are recognized as they occur. Cost postings are matched to revenues and immediately reported as expenses, while revenues are posted to an income statement account. Recognition and adjustment postings are generated simultaneously with the transactions. The app is fully integrated with the G/L.
The application is divided in four sections:
Recognition data is stored in the same location as cost and revenue data, eliminating the need for periodic batch jobs. Costs and revenues always match, reported profit and margins are always up to date. Income statements or cost of sales reports can be produced at any time.
- Support for sales projects with Fixed Price, Time and Expense, or Periodic Service
- Full transparency into the revenue recognition process
- Enhanced cost management data through additional reporting attributes such as Customer Group
- Ability to analyze recognition values based on accounting principles
- Ability to analyze individual recognition postings in detail
- Ability to drill down from recognition journal entries to cost or revenue journal entry and source document
- Ability to adjust the recognized revenue and cost of sales
- Ability to enter accruals, such as for anticipated losses or unrealized costs
The standard delivery supports revenue recognition based on IFRS requirements. Only single level projects are supported.