This section provides you with an overview of how Receivables uses invoicing and accounting rules.

Define Accounting Rules

Use the Accounting Rules window to define an unlimited number of accounting rules. See: Accounting Rules.

Define accounting rules using the following rule types:

• Daily Revenue Rate, All Periods

  Use rules of this type if you want Receivables to use a daily revenue rate to accurately calculate the revenue distributions across all accounting periods, including both full and partial periods. A partial period is an accounting period whose start date is not the first day of the period, or whose end date is not the last day of the period.

  Suggestion: This accounting rule type provides you with the most precise revenue recognition schedule possible. Use rules of this type in cases where you must meet strict revenue accounting standards for partial accounting periods.

  Rules of this type require the specification of an accounting rule start and end date during invoice entry. If the invoice is imported with a rule of this type, then both dates are required by AutoInvoice.

  Receivables uses the total revenue amount for the line in conjunction with the number of days in the rule duration period (including both start and end dates) to calculate the daily revenue rate:

  Daily Revenue Rate = Total Revenue / Number of Days (Total Rule Duration Period)

  Using the daily revenue rate, Receivables can accurately calculate the revenue for each period in the revenue recognition schedule:

  Revenue Amount = Daily Revenue Rate * Days in Period

• Daily Revenue Rate, Partial Periods

  Use rules of this type if you want Receivables to use a daily revenue rate to accurately calculate the revenue for only partial periods. This rule provides you with an even, prorated revenue distribution across the schedule's full periods.

  Similar to the Daily Revenue Rate, All Periods rule type, rules of this type also require an accounting rule start and end date to enable the calculation of the daily revenue rate.

• Fixed Schedule

  For accounting rules with a fixed schedule, you specify the period (such as weekly or monthly) and the number of periods over which the revenue is recognized. The revenue is then evenly divided across the periods. The percentage can be updated if necessary, but must always total 100. For example, if you define an accounting rule with a period type of monthly, spanning 4 periods, and you accept the default, prorated revenue distribution, Receivables will recognize 25 percent of the transactions revenue for each of 4 months.

  Fixed schedule rules also let you set specific GL dates on which to recognize revenue, when you select Specific Date as your period type. When you specify a date for a period, then all other periods for this accounting rule must also be assigned a date.

• Variable Schedule

  When defining accounting rules with a variable schedule, you must enter a period type, but not the number of periods. The number of periods is defined when you manually enter an invoice in the Transaction window. If the invoice is imported, the number of periods is passed through AutoInvoice.

  When defining a variable schedule accounting rule, you can optionally specify what percentage of revenue you want to recognize in the first period. The remaining revenue will be prorated over the number of periods you specify during invoice creation.

For example, suppose you bill a contract for $900, which starts January 14 and ends April 13 (90 days), and the accounting period is Monthly. In this contract period, January and April are partial periods, and February and March are full periods. This table illustrates the various revenue recognition schedules that Receivables calculates, depending on the accounting rule type:

The above example illustrates the following:

• If the accounting rule is Daily Revenue Rate, All Periods, then Receivables calculates the daily revenue rate ($900 / 90 days = $10) and uses the rate to calculate the revenue in each period. Receivables uses the final period to catch up with any rounding issues.

• If the accounting rule is Daily Revenue Rate, Partial Periods, then Receivables uses the daily revenue rate to calculate the revenue for only the partial periods. The full periods receive equal revenue distributions.

• If the accounting rule is Fixed Schedule, then Receivables uses the rule definition and divides the revenue equally across the number of periods specified in the rule.

• If the accounting rule is Variable Schedule, then you specify the number of periods during invoice entry, and optionally specify the percentage of revenue to recognize in the first period. Receivables evenly distributes the revenue balance over the remaining periods.

  In this example, 20% of the total revenue is recognized in the first period out of a total of four periods.

Assign Invoicing and Accounting Rules

For invoices that you enter manually, you can assign an invoicing rule in the Transactions window. You can assign a default invoicing and accounting rule to your items in the Master Item window (Invoicing tabbed region) and to your Standard Lines in the Standard Memo Lines window.

This table shows where you can assign a default invoicing rule:

This table shows where you can assign an accounting rule:

If you are entering an invoice manually, you must enter an invoicing rule on the invoice header or you will not be able to associate accounting rules with the invoice lines. If you enter an invoicing rule and include items or standard memo lines that have associated accounting rules, the accounting rules default for the invoice line. You can change or manually enter the accounting rules for these invoice lines if there has been no activity against the invoice.

If you import invoice data from an external system, you must populate the correct columns in the AutoInvoice tables if you want AutoInvoice to generate invoices with rules.

This table shows which column to populate if you want AutoInvoice to generate invoicing rules:

This table shows which column to populate if you want AutoInvoice to generate accounting rules:

AutoInvoice uses the invoicing rules assigned to the invoice lines to group lines into invoices. An invoice can only have one invoicing rule, hence lines imported with an invoicing rule of Bill in Arrears will not be grouped with lines with a Bill In Advance invoicing rule when creating an invoice.

Accounting rules, however, require no special grouping, as an invoice may contain a different accounting rule for each invoice line.

Determine the Invoice and GL Dates

When importing invoices, AutoInvoice determines the invoice GL date and the transaction date as follows:

• If you use Bill in Advance as the invoicing rule, AutoInvoice uses the earliest start date of the accounting rules associated with your invoice lines as the GL date of the invoice.

• If you use Bill in Arrears as the invoicing rule and the invoice line has a Fixed Schedule accounting rule and a period of Specific Date, AutoInvoice sets the GL date and transaction dates equal to the latest Specific Date of the accounting rule.

  For all other accounting rules using the Bill in Arrears invoicing rule, AutoInvoice first computes an ending date for each invoice line based on the accounting rule, accounting rule start date, and duration. AutoInvoice then uses the latest specific date for both the invoice GL date and the transaction date.

When creating invoices with rules manually, the GL date of the invoice is entered during invoice entry. If you use Bill in Advance as the invoicing rule, this date will remain equal to the GL date of the invoice.

However, Receivables overrides this date for an invoicing rule of Bill in Arrears when you save the invoice after completing invoice lines. Receivables uses the same method to derive the new GL date as it does for imported invoices. This method is explained in detail above. Receivables will warn you that it is updating the GL date of the invoice when you save the record. You can then change this date if it does not meet your requirements.

Determine Accounting Rule Start Dates

The first GL date (or accounting rule start date) for an accounting rule can be different from the GL date of the invoice. When the Revenue Recognition program is run, then if the accounting rule start date is different from the invoice start date, the accounting rule will modify the invoice start date and the period in which you recognize your receivable based on whether the invoicing rule is Advanced or Arrears. For example, the GL date of the invoice is January 10, and the First GL Date of the accounting rule for the line is February 15. When the Revenue Recognition program is run in January, the GL date of the invoice is changed to February 15 and the entire schedule moved accordingly. Depending on whether the invoicing rule is Advanced or Arrears, the receivable is recognized either in February or in the last month of the schedule.

When entering invoices manually, you must set the date that you want to start recognizing revenue for an invoice line. Use the First Date field in the Lines window to enter the start date.

When importing invoices, AutoInvoice determines the accounting rule start dates as follows:

• If your invoice has an accounting rule with a type Fixed Schedule and a period of Specific Date, AutoInvoice uses the earliest accounting rule date as your rule start date. For example, if your accounting rule dates are 10-JUN-93, 10-JUL-93, and 10-AUG-93, AutoInvoice uses 10-JUN-93 as your rule start date.

• If you elected to derive the rule start date, AutoInvoice first uses the ship date in the interface table. If the ship date does not exist, AutoInvoice uses the sales order date. If the sales order date does not exist, AutoInvoice uses the date you entered in the Run AutoInvoice window.

• If your invoice does not use a Fixed Schedule accounting rule with a specific date period, or you have not elected to derive the rule start date, then AutoInvoice uses the default date you specified in the Run AutoInvoice window.

If you are using a deferred accounting rule, you can use a different GL start date than the one that you entered on the transaction line in the Revenue Accounting and Sales Credits window. See: Deferred Accounting Rules.

View and Update Account Sets

Account sets for invoices with rules are created by AutoAccounting. You can manually update the account sets for both imported and manually created invoices in the Distributions window off the Transactions Workbench.

For each account set, Receivables specifies the account and percent of the line total assigned to each account. In the Sets for this Line and Sets for All Lines regions of the Distributions window, you can update account sets to split revenue or offset amounts over multiple accounts any time before running the Revenue Recognition program. This lets you ensure that revenue is distributed to the correct accounts, regardless of how account structures may change. Receivables always ensures that the entered percents total 100.

In the Sets for All Lines region, you can view account sets for all lines. You can also use this region to update the account assignment for a given line, but you must use the Sets for this Line region to update the percent assigned to the account.

To update an account set, specify the account set class that contains the account sets. Valid Account Set Classes include:

After the Revenue Recognition program is run, the names of the regions of the Distributions window change to the Accounts for This Line and the Accounts for All Lines regions. Use these regions to review and update the actual distributions that were generated using the account set that you specified.

Recognize Revenue

Invoicing and Accounting rules are used to schedule how and when you want to recognize revenue and receivable amounts for selected invoices. However, the distributions are not created until you run the Revenue Recognition program. See: Recognizing Revenue.

The Revenue Recognition program is run automatically whenever you transfer records to your General Ledger using the Submit Accounting program. This ensures that the revenue for invoices with rules is recognized before you post and close the period. Alternatively, you can submit the Revenue Recognition program manually at any time from the Run Revenue Recognition window. The Revenue Recognition program will not create duplicate distribution records even if the program is run several times within the same period.

Credit Invoices with Rules

You can adjust the account assignments of invoices that you wish to credit in three ways: LIFO, Prorate, and Unit. The Last In First Out (LIFO) method backs out revenue starting with the last GL period of the invoice revenue. This method reverses revenue recognition from prior periods until it has backed out an amount of revenue that is equal to the amount of your credit memo line. The Prorate method credits an equal percentage of all of your invoice's account assignments. The Unit method lets you reverse the revenue for the number of units you specify from an original line of the invoice. For example, if an invoice line has a quantity of 10 units, and you credited 2 units, then Receivables would reverse 20% of the revenue starting with the period you specify in the additional line information tabbed region, and continuing until the entire amount of the credit is given. You can specify any of these credit memo methods when you create credit memos through either the Transaction window or by running AutoInvoice.