In IFS applications we are looking to sell a service for 1 2 or 3 years. We can get the customer order defined and invoice, but Accounting wants to recognize the revenue by month since the services covers an extended period of time. For example selling a service that will last 12 months for 1200 dollars they want the 1200 to go into an accrual account and then each month they want 100 to come out of that accrual account and then go into the normal revenue account. They also want to do this for an expense relating to the same item. Any ideas?
+6Hi
Preferably you use a service contract for this. It allow the revenue to be periodically split automatically. It also allows you to keep track on the services covered on the contract including templates, pricing and invoicing rules, performed services, margin and a lot more than that
Regards
Joakim
Joakim is there a way to define a charge on the customer order to be applied and connected with the sales part?
+21Alackas. My suggestion would be that the sales part that is used on the service contract is the start of adding the charge automatically. So whenever a customer order part line is inserted, with the specific service (sales) part, an event is triggered that will add a charge line.
We are aware of the connecting of charges to a sales part so it is auto included. But what we are trying to do is allocate commissions via the cost on a charge line. This allows us to post it to the balance sheet. Thus depending on who is going to get the commission on this service sale we need to have a different charge utilized. Today I have the Order Type stop after release to add the charge manually and then we manually “deliver” the order. Perfect solution is on the service tab some magical way we could specify the charge along with the sales part.
Allan
+2You could also try to apply period allocation to the invoice voucher. You can do that by creating the invoice and while the voucher is in hold table, go to voucher entry screen and do RMB Period Allocation on the revenue voucher row. When you update the voucher to GL, allocation will be applied and X vouchers will be created.
If we have Service Contracts set to bill out on the 1st of each month will the period allocation be based on the Calendar month or the accounting Month? For example: our accounting period runs from April 1st to May 3rd(5 weeks), if we do our service billing on the 1st of each month, April 1st and May 1st will we have two billings in April, or will it put one billing in April and one in May? Is there a way to change the period allocation to match our accounting periods?
+24rcanning wrote:
If we have Service Contracts set to bill out on the 1st of each month will the period allocation be based on the Calendar month or the accounting Month? For example: our accounting period runs from April 1st to May 3rd(5 weeks), if we do our service billing on the 1st of each month, April 1st and May 1st will we have two billings in April, or will it put one billing in April and one in May? Is there a way to change the period allocation to match our accounting periods?
Hi,
Firstly, revenue allocation is not the same as billing frequency. Billing could be quarterly, but revenue allocation by period (~month).
Service Contract Periodic Allocation is based on accounting periods.
There are 3 different modes for the periodic allocation: Proportional, Even, Mixed. Typically (using Proportional) revenue will be allocated to periods based on the number of days in the period - note the percentage in the screenshot (Feb gets less revenue than Jan and March):
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