The Revenue Management Engine controls the process of automatically analyzing collectibility and then making revenue recognition decisions for your manually entered and imported invoices.
This process is automatically enabled if:
You have defined a revenue policy, or
Invoice lines are associated with contingencies
The Revenue Management Engine decides whether to initially distribute revenue to an earned or unearned revenue account.
Once this decision is made, AutoAccounting creates the actual accounting distributions, either by AutoInvoice (for invoices without rules) or by the Revenue Recognition program (for invoices with rules).
Note: Or, to pass accounting distributions to Receivables through the AutoInvoice interface tables, set the Override AutoAccounting flag and assign the Immediate accounting rule to each billing line. See: AutoInvoice Table and Column Descriptions.
The Revenue Management Engine does not analyze collectibility for invoices that are assigned deferred accounting rules. To recognize revenue for an invoice with a deferred accounting rule, use the Revenue Accounting Management (RAM) wizard. See: Revenue Accounting.
Note: The timing of revenue recognition does not impact the timing of recognition of taxes, freight, and late charges. Recognition of taxes, freight, and late charges occurs when the receivable is created.
Suggestion: You can query an invoice in the Transactions workbench at any time to review the invoice's accounting distributions.
The Revenue Management Engine considers any existing revenue contingencies when evaluating your invoices for revenue recognition.
If an invoice has no such contingencies, then the Revenue Management Engine immediately recognizes revenue (for invoices without rules) or recognizes revenue according to the initially assigned accounting rules (for invoices with rules).
If an invoice has one or more contingencies, then the Revenue Management Engine immediately defers revenue.
The extent of the revenue deferral, and subsequent timing of revenue recognition, depends on the contingency.
Time-based contingencies must expire before the contingency can be removed and revenue can be recognized.
See: Monitoring Contingencies with the Revenue Contingency Analyzer.
Some contingencies require payment before the contingency can be removed and revenue can be recognized.
Post-billing customer acceptance clauses must expire (implicit acceptance), or be manually accepted using the RAM wizard (explicit acceptance) or in Oracle Order Management, before the contingency can be removed and revenue can be recognized.
Pre-billing customer acceptance clauses require the recording of customer acceptance in the feeder system, or its expiration, before importing into Receivables for invoicing. Customer acceptance or its expiration must occur before the contingency can be removed, and the order can be imported into Receivables for invoicing.
See: Customer Acceptance.
The Delivery contingency requires proof of delivery before the contingency can be removed and revenue can be recognized.
The following table indicates each contingency that Receivables provides, and its corresponding removal event:
| Contingency Name | Contingency Removal Event |
|---|---|
| Cancellation | Contingency expiration date or expiration period |
| Customer Creditworthiness | Receipt application |
| Delivery | Proof of Delivery |
| Doubtful Collectibility Due to conditions such as:
| Receipt application |
| Explicit Acceptance | Customer acceptance |
| Extended Payment Term | Receipt application |
| Fiscal Funding Clause | Contingency expiration date or expiration period |
| Forfeitures | Contingency expiration date or expiration period |
| Impaired Loans | Receipt application |
| Installation | Customer acceptance |
| Leasing Doubtful Collectibility Due to conditions such as:
| Receipt application |
| Pre-Billing Acceptance | Invoicing |
| Refund | Contingency expiration date or expiration period |
Note: You can define your own contingencies, as well as defaulting rules for contingency assignment. See: Defining Revenue Contingencies.