For invoices that contain combinations of products, software, and/or services with different revenue recognition criteria for each sku, it is necessary to apply Multiple-Element Arrangement Accounting rules. This process includes the allocation of the total invoice amount to each specific item within the arrangement, and then applying specific revenue recognition rules for each item.

In order to ease this process, it would be helpful to define in the item setup the revenue recognition rules associated with each specific sku. Example revenue recognition rules are "recognize upon shipment", "recognize over X period of time", and "recognize at a future point-in-time." The deferral GL accounts can also be defined in the item setup. It would also be necessary to define the revenue allocation method for each item - Vendor Objective Specific Evidence, Estimated Selling Price, etc.

These rules and allocation method definitions would be used to allocate revenues to each item within the multiple-element arrangement, and the appropriate revenue would be recognized at the proper time.

Anyone that invoices for combinations of hardware, software, and/or services on one invoice would find this feature useful. Anyone who has experienced the horrors of manually applying multiple-element arrangement accounting will certainly understand the value of this feature.

I have searched through hundreds of ideas, and have not seen anything similar.

Additionally, I have demoed just about every Third-Party software available to complete this task. SoftTrax, RevStream, Intacct, just to name a few. All of these solutions are very costly, and time-consuming projects.

by: Dana T. | over a year ago | 1 - Financial Management