Revenue Management in Sage Intacct helps businesses manage when revenue should be recognized and how that revenue should be recorded in the General Ledger.
Depending on how your business handles billing and contracts, revenue management can be configured for the following:
- Accounts Receivable (AR)
- Order Entry
- Contracts
Choosing the right option is important because it determines how revenue schedules are created and how revenue flows into your accounting records.
Important: In a multi-entity environment, Revenue Management should be configured at the top level.
Revenue recognition is basically the process of deciding when revenue should be recorded, rather than simply recording it when a customer is billed.
For example, imagine a customer signs a one-year service agreement for 12,000. The customer may be billed the full amount upfront, but the company provides the service over 12 months.
Instead of recognizing the full 12,000 immediately, the company may recognize 1,000 each month over the year.
Sage Intacct handles the process using revenue recognition schedules. These schedules tell the system how much revenue should be recognized and when it should be posted.
Revenue management can be used in three main areas.
- Accounts Receivable-(Use this option when revenue recognition is mainly based on AR invoices)
- Order Entry
Use this option when your organization creates invoices through Order Entry and wants revenue schedules to be created from those transactions.
Contracts:
Use Contracts when your organization manages revenue through customer contracts and needs features such as revenue templates, contract-based schedules, or Multiple-Element Arrangements (MEAs).
This is one of the first decisions to make when setting up revenue management.
Although Sage Intacct allows revenue management to be configured in both accounts receivable and order entry, it is generally easier to choose the application that best matches your actual billing process.
If your revenue starts with an AR invoice, use Accounts Receivable.
If your revenue starts with an Order Entry invoice, use Order Entry.
If your revenue is managed through contracts, use Contracts.
Choosing the right application from the beginning can make the setup easier for both administrators and end users.
To enable Standard Revenue Recognition for Accounts Receivable, follow these steps:
Select the appropriate options to link AR invoices with the revenue recognition process, ensuring that all relevant data flows seamlessly into your financial reports.
- Go to Company > Admin > Subscriptions.
- Select Revenue Management. Lick Subscribe or Configure.
- Under Accounts Receivable, select Standard revenue recognition.
- Select the Default Deferred Revenue Account.
- Select the Revenue Recognition Journal.
- If users need to make changes to revenue schedules, select Edit revenue schedules.
- Click Save.
What Do These Settings Mean?
Standard Revenue Recognition
This option allows users to create revenue recognition schedules for applicable AR invoices. If no revenue recognition is selected, revenue schedules will not be available for AR invoices.
Default Deferred Revenue Account
This account is used when revenue needs to be deferred but the account selected on the invoice does not have a specific deferred revenue account assigned to it. In simple terms, it is the default account Sage Intacct uses for deferred revenue when no other account has been specified.
Revenue Recognition Journal
This is the journal Sage Intacct uses to post the entries created from revenue recognition schedules. It is important to select the journal that your organization uses for revenue recognition transactions.
Edit Revenue Schedules
If users need to adjust revenue schedules, Enable this option.
Enabling the option alone is not enough. The users also need the appropriate List and Edit permissions for Revenue Recognition Schedules in General Ledger permissions. Configure Revenue Management for Order Entry, if your organization uses Order Entry for billing, you can configure Revenue Management directly for Order Entry.
Follow these steps:
Go to Company > Admin > Subscriptions.
Select Revenue Management. Click Subscribe or Configure. Under Order Entry, select Standard revenue recognition. Enable edit revenue schedules if users need to modify schedules. Enable event-based recognition if revenue should start only after a specific event, such as delivery. Select the required revenue recognition schedule entry summary frequency. Click Save.
Understanding Order Entry Revenue Recognition Standard Revenue Recognition
This enables revenue recognition for order entry invoices and allows revenue schedules to be created for applicable invoice lines. Edit Revenue Schedules. This option allows authorized users to make changes to revenue recognition schedules. Users must also have the appropriate permissions in order to edit the schedules.
Event-Based Recognition Sometimes creating an invoice does not mean that the revenue should be recognized immediately.
For example, a company may invoice a customer when an order is placed, but the product may not be delivered until several days later. In this situation, Event-Based Recognition can be useful. Sage Intacct uses the Delivery Status of the invoice line to determine whether the required recognition event has happened.You can also configure the system to wait until all applicable invoice lines have been delivered before revenue recognition begins.
Revenue Recognition Entry Summary Frequency
Sage Intacct also lets you decide how revenue recognition entries should be grouped when they are posted to the General Ledger.
You can choose from:
One per entry – Creates a separate journal entry for each revenue recognition entry.
Daily – Groups eligible entries by day.
Weekly – Groups eligible entries by week.
Monthly – Groups eligible entries by month.
Entries can be combined when they have the same document type, currency, and location. The grouping is based on the GL posting date and the frequency you select.
Simple Example:
Suppose your company has 50 revenue recognition entries that qualify for grouping. With one per entry, you could end up with 50 separate journal entries. With Daily, those entries may be combined into one daily journal entry. With monthly, eligible entries can be summarized into monthly journal entries.
This setting is useful when you want to control how much detail appears in the General Ledger.
Configure Revenue Management for Contracts
If your organization manages revenue through customer contracts, revenue management can be configured within contracts.
Before doing this, you must first subscribe to Contracts. Once contracts are enabled, the contracts section will appear on the revenue management configuration page.
To configure it:
- Go to Company > Admin > Subscriptions.
- Select Revenue Management.
- Click Subscribe or Configure.
- Go to the Contracts section.
- Select the appropriate revenue recognition option.
- Review the additional settings and configure them according to your business requirements.
- Click Save.