Revenue recognition

Introduction

Revenue recognition is an accounting technique that allows work done but not yet invoiced to be recognised as revenue for the supplying organisation. This only really applies when the contractual agreement with their custom is for a fixed price invoice at intervals during the contract.

This is functionality that has long been available in D365 FSCM. However, it is not available in the standard version of Project Operations. Therefore, sa.global have developed it in Project Operations when integration with D365 FSCM using Microsoft’s Standard Integration mode.

Configuration

Revenue recognition feature will be configurable via the Project tasks. Users must enable Revenue recognition at the Global project parameter and project level.

Project parameter

User definable parameters are available under Organisational units > Project parameters. This is the global level parameter which enables the feature for a legal entity.

Project Operations > Settings > parameters > Default organisation entity > Project parameter tab

Fields	Description
Activate revenue recognition	Enable/disable the Revenue recognition feature at Project parameters

Project level

This setup is available of the project level. If the feature is enabled in the global project parameter, the field ‘Activate revenue recognition’ will be visible on project master. It can be enabled/disabled on the project level. Once the feature is enabled on the project, all the related buttons and tabs will be visible.
Project Operations > Projects > Projects

Fields	Description
Activate revenue recognition	Enable/disable the Revenue recognition feature at Project level.
Mandatory transaction category	Transaction category will be mandatory on task to recognise revenue if set to Yes. This field will be visible if Activate revenue recognition is Yes
Mandatory financial dimension company	Financial dimension ‘Company’ will be mandatory on task to recognise revenue if set to Yes. This field will be visible if Activate revenue recognition is Yes
Mandatory Business unit	Financial dimension ‘Business unit’ will be mandatory on task to recognise revenue if set to Yes. This field will be visible if Activate revenue recognition is Yes
Mandatory Cost centre	Financial dimension ‘Cost centre’ will be mandatory on task to recognise revenue if set to Yes. This field will be visible if Activate revenue recognition is Yes
Mandatory Department	Financial dimension ‘Department’ will be mandatory on task to recognise revenue if set to Yes. This field will be visible if Activate revenue recognition is Yes

Recognise revenue tab

The tasks created for the project (Tasks tab) are automatically moved to Recognise revenue tab. This tab will be visible if Activate revenue recognition is Yes on project.
Project Operations > Projects > Projects > Recognise Revenue (tab)

Name	Name of the task
Planned effort	‘Effort’ defaulted from the task
Effort completed	Auto-updated based on approved efforts for the task.
Effort remaining	Auto-updated. Planned effort – Effort completed
Contracted revenue	User must enter the value manually
Source	Defaulted based on the resource assigned to the task. 1. IF Resource type = User AND Organization unit = Contracting unit THEN Source = Local 2. IF Resource type = User AND Organization unit NOT= Contracting unit THEN Source = InterCo 3. IF Resource type NOT= User AND Organization unit = Contracting unit THEN Source = Third Party 4. IF Resource type NOT= User AND Organization unit NOT= Contracting unit THEN Source = InterCo Third Party 5. IF Resource type = User AND Organization unit = Contracting unit AND Third party user = Yes THEN Source = Third party 6. IF no resource is assigned THEN Source = None 7. IF Resource does not have Organization Unit THEN Source = None
% Recognized so far	Revenue recognized till date in %. This field is auto updated once the journals are posted.
Revenue to date	Revenue recognized till date in amount. This field is auto updated once the journals are posted.
Calculated % complete	Revenue calculated till date (in %) based on approved efforts. This field is auto updated.
Calculated revenue	Revenue calculated till date (in amount) based on approved efforts. This field is auto updated.
% override complete	User can manually update this field to override the system calculated % revenue complete.
Override revenue	User can manually update this field to override the system calculated revenue amount.
Revenue to recognize	Indicates the amount for which the journals must be created.
Parent task	If the task has sub-tasks, then this field will be set as Yes. Else it will be No.
Valid	If the task is missing any mandatory fields, then this field will be set as No. Else it will be Yes. This is based on the Mandatory field parameters on the project level.
Revenue recognition transaction category	Lists the transactional category. Value is defaulted from resource.

Resources

New fields are added on the Resources which are defaulted on the project tasks when the resource is assigned. Recognise revenue field group will be visible only if Revenue recognition is enabled at Global parameter level.
Resources > Resources > Scheduling (tab):

Resources > Resources > Financial dimensions (tab):

Fields	Description
Third party user	Indicates if this user is a third-party user. This field will be visible if Resource type is User.
Revenue recognition transaction category	Lists the transactional category. This field will be visible if Revenue recognition is enabled on global parameter level.
Business unit	Financial dimension
Department	Financial dimension
Cost centre	Financial dimension

Approvals

New fields are added on the Approvals form which are defaulted on the project tasks when the resource is assigned.

Projects > Approvals > Time Entries for Approval

Fields	Description
Revenue recognition	Indicates if the transaction is posted for Revenue recognition project
Billing type	This field is always set as Non-chargeable and un-editable for Revenue recognition project time entries.

Recognise revenue/Validate tasks:

These buttons are added on the projects level to validate tasks and generate journals to recognise revenue. This button group will be visible if Activate revenue recognition is Yes.
Projects > Projects > Revenue (button group):

Fields	Description
Validate Tasks	When clicked system checks if any mandatory fields are missing.
Recognise	When clicked, system generates fee/expense journals.

Journals:

Fields are added on the journals header which indicates if it is created via Revenue recognition process.
Sales > Transactions > Journals

Fields	Description
Revenue recognition	Set to Yes for all journals created through Revenue recognition process.

Sales > Transactions > Journals > Journal lines > details:

Fields	Description
Business unit	Financial dimension defaulted from task. This field will be visible if Revenue recognition is Yes
Department	Financial dimension defaulted from task. This field will be visible if Revenue recognition is Yes
Cost centre	Financial dimension defaulted from task. This field will be visible if Revenue recognition is Yes
Recognise revenue	Set to Yes for journals created through recognise revenue process

Note:
* If source as Local or None, fee journals will be created for recognised amount.
* If source as Third party, expense journals will be created for recognised amount.

Actuals:

All the Time/Fee/Expense transactions related to Revenue recognition process is marked to indicate the same.
Sales > Transactions > Actuals

Fields	Description
Revenue recognition	Set to Yes for all transactions related to Revenue recognition process.

Revenue recognition history:

This form stores the history of all Revenue recognition journals posted and other details specific to the task.

Projects > Projects > Recognise revenue (tab) > Task details

Fields	Description
Journal number	Unique journal number of the journal created through revenue recognition process
Journal	Description of the journal

Note Other fields are same as task fields

Project operations Integration journal – D365 FSCM

New fields are added in D365 FSCM – Project operations integration journal which indicates it is created via the revenue recognition process and specifies the related journal number from Project operations.

D365 FSCM > Project Management and Accounting > Journals > Project Operations Integration journal > Expense (Tab)/Fee (Tab)

Fields	Description
Evergreen journal number	Project operation journal number
Revenue recognition	Set to Yes for journals created through recognise revenue process
Unit billing	Set to Yes for journals created through Unit billing process

D365 FSCM > Project Management and Accounting > Journals > Project Operations Integration journal > Hour/Fee/Expense (Tabs) > Distribute amount

The financial dimension – Business Unit, Cost Centre, Department – are defaulted from the respective journal lines from Project operations. For Hour journals it is defaulted from Project Task.