Revenue recognition allows you to view, search and adjust the distribution of revenue for a case, business unit or entire project portfolio. This means you have the ability to determine when revenue is recognized, either before (accrued) or after (deferred) project invoicing and payment.
For example, if a project will take several months to complete and the customer will make payments at the beginning and end of the project, you are able to recognize revenue for every month in which services are rendered instead of having two high revenue months with no revenue for the intervening months.
When the Revenue recognition add-on is activated it replaces the basic revenue adjustment function available in the Billing & Revenue section of a case. Revenue is entered and adjusted through the Revenue recognition tool, and is displayed in the case overview and the Billing & Revenue section.
From within a case, click the Revenue recognition button on the title bar of the Billing & Revenue section to view revenue for that project for three months starting from the current month. Change the Time frame and/or First month, and click Search to display revenue for a different period. Or click Show all to view revenue for all open cases.
Revenue for all open cases is also accessed through Tools > Revenue recognition. And again, by default revenue is displayed for three months starting from the current month. Additional search criteria located above the table allow you to delimit results accordingly.
Time frame limits the length of a search from one month to six months, and First month specifies the beginning of that time frame. Open/Closed returns cases of one standing or the other. Start typing the name of an Account owner or Case owner, and select from the matches to view only the cases that belong to that person. Return results based on Business unit, or select multiple units on the drop-down by holding the Ctrl key when clicking. Order by indicates whether results will be displayed by Case name or Account name. Finally, click Search to refine results according to search criteria.
Data in the table is ordered by case or account name on the left, with an editable row for the distribution of Revenue and a static row displaying the actual Invoiced amount. Columns labeled across the top indicate revenue by month. Additional columns include Unallocated, the difference between Invoiced and Revenue over the entire case, and Edited which provides details about the last edit to a case’s revenue during the displayed time frame.
Revenue is available for use in account, case, timeline and financial summary reports as previously.
Invoiced and adjusted revenue
Work hour, product and travel expenses from a case are recognized as revenue when invoiced and the invoice status is marked Sent. The invoiced expenses before tax, or the Total excluding VAT on the invoice, are recognized as revenue for the month specified in the Date of entry on the invoice (Config tab). By default, the Date of entry is the day the invoice is created. If the date isn’t edited, revenue is recognized in the current month or if revenue recognition entries have been locked, then the next open month.
The total amount excluding tax is automatically inserted as revenue in the case Overview, the Billing & Revenue section and as the Invoiced and Revenue figures on the Revenue recognition table. Revenue can be redistributed on the Revenue recognition table by adjusting figures in the Revenue row. Changing the amount of revenue recognized month by month in the table is reflected in the Billing & Revenue section and the case Overview. Figures in the Invoiced row are controlled strictly from invoicing and can’t be edited.
If for some reason revenue is not redistributed correctly, and the Invoiced and Revenue rows are not equal, the difference is displayed as Unallocated revenue. While the Invoiced and Revenue row totals need not match on a monthly basis, it’s important that they match overall.
If a case has Unallocated revenue, invoiced expenses are recognized in the Invoiced row on the Revenue recognition table, but not in the Revenue row, not in the Billing & Revenue section and not in the case Overview. And the amount of unallocated revenue will increase.
A positive figure in the Unallocated column represents income that has been Invoiced but not distributed as Revenue. While a negative figure in the Unallocated column represents an excess of distributed Revenue that has not yet been Invoiced.
When revenue from an invoice has been recognized, and then the invoice status is reversed to a status prior to Sent, revenue from that invoice is subtracted from the Invoiced row on the Revenue recognition table but not from the Revenue row. This creates disparity between the Invoiced and Revenue rows, and is then reflected as Unallocated revenue which requires manual adjustment.
When an invoice is reimbursed as a Credit note, and a new invoice isn’t immediately created, revenue from that invoice is subtracted from both the Invoiced and Revenue rows on the Revenue recognition table as if the invoice never existed.
When closing a case, a notice appears if the case has Unallocated revenue. It’s recommended to recognize the Unallocated revenue prior to closing the case.
Lock entries is a permanent and irreversible control which prevents entering and editing revenue for all cases by any person other than the system administrator.
To Lock entries for a month and all prior months, go to Tools > Settings > Revenue recognition and click to mark the checkbox in front of Lock month and click the calendar icon to open and navigate to select a date. Click Save. A confirmation message will appear in a pop up window to verify that you want to lock entries, click Yes or Cancel as intended.
If entries for a given month are locked in Revenue recognition, new revenue entered for that month will be pushed to the first unlocked month following the Date of entry.
Revenue can be further distinguished by Cost centers (also used as revenue centers). Cost centers allow you to provide more information about how income is generated by identifying the business unit, department or other division responsible.
To enable cost centers go to Tools > Settings > Revenue recognition. Click the Enable cost centers checkbox, and click Save. Through Tools > Settings > Cost centers create the cost centers by providing names, assigning unique identifiers and selecting a default.
A default cost center can be specified within a case, by editing the Overview section. The cost center can be selected for billable items in the Products section of a case by editing the row, and selecting the desired cost center. Otherwise, cost centers are identified for work hours, products and travel expenses on an invoice in Draft status by editing the invoice row and selecting from the Cost center drop-down menu.
In the Revenue recognition table, information about Cost centers is hidden behind the column for each month and accessed by clicking on the corresponding row and column.
If revenue was generated in Visma Severa prior to the use of Revenue recognition and cost centers, an additional cost center entitled Other revenue is visible. This field contains all revenue that was created previously, and revenue can be moved to or from this field as with any other cost center.