Getting an Overview of Event-Based Revenue Recognition - Service Documents (3M3)
Event-Based Revenue Recognition allows you to manage revenue recognition for service contracts and service orders. For a service contract, revenue is recognized over time, based on the billing plan of the service contract item. For a service order, revenue is recognized based on an event, such as the completion of a service order, and the associated cost is recognized in the same period in which the revenue is recognized. Manual adjustments of revenue and costs are possible. In the Service Actuals app, revenue and costs on service documents are reported in real time and the margin can be easily analyzed. If necessary, period-end closing corrects real-time revenue recognition postings.
Key Process Flow
The key process steps that this solution process supports, are the following:
- Monitor revenue recognition for service documents
- Manage real-time revenue recognition issues
- Run revenue recognition for service documents in period-end closing
- Manage revenue recognition issues for service documents
- Review service actuals
Business Benefits
The business benefits of using this solution process are the following:
- Support time-based revenue recognition for service contracts based on the referenced billing plan
- Ensure the matching between costs and revenue for service orders
- Ensure correctness of posted values after period-end closing, with no separate settlement required
- Automate recognition activities and reduce manual effort during the period and at period-end closing
- Avoid the need for additional reconciliation