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Unbilled Revenue Workflow

The unbilled revenue feature allows companies to include the amounts for whole billing schedules on the balance sheet. These amounts are included in an unbilled revenue account and the contract are billed through installments.

For example, a billing schedule is for 3 years with the invoices billed annually over a 3-year period. The whole contract amount is recorded in the unbilled revenue account from which annual invoices are created. The offset account is the revenue or the deferred revenue account.

Note icon. Note: The top billing and the unbilled revenue features do not and cannot work together because reconciliation issues in the General Ledger can occur. ClosedView example.

For example, on the Item Group Setup page, ItemGroupA is set up with the Number of top lines set to 2. On the Billing Schedules page, three items are added. All three items belong to ItemGroupA. When the initial journal entry is created for the unbilled revenue feature, the amount for all three items are processed to the unbilled account. However, when the invoice for the billing schedule is created, only the amounts for the top two items are included. As a result, the invoice amount does not match the amount processed to the unbilled revenue account, and reconciliation issues in the General Ledger occur.

  • If you want to use the unbilled revenue feature, do not set up the Item Group Setup page with any item groups, or ensure that all item groups have the Number of top lines set to zero (0).
  • If you want to use the top billing feature, keep in mind that all Unbilled revenue actions are not available.

Set Up

Ensure a system administrator completes the setup tasks:

  1. On the Advanced Recurring Contract Billing Parameterspage, set up the Unbilled Revenue section.
  2. On the Unbilled Revenue Setuppage, set up the item and accounts to use for the unbilled revenue feature.

    3. The unbilled revenue feature can be used for items where Item Type is Standard. This feature can also be used for deferral items.

    To use the unbilled revenue feature with the short-term functionality, ensure to set up the short-term options on the Advanced Recurring Contract Billing Parameters and the Unbilled Revenue Setup.

Basic Workflow

To use the unbilled revenue feature, follow this general workflow: 

  1. On the Billing Schedules page, create a billing schedule as usual.

    2. If the item is not already set up to use the unbilled revenue feature, select the Unbilled revenue action for the line. Set the Unbilled revenue option to Yes, and review and edit the unbilled revenue and discount accounts as needed.

  2. For the billing schedule, select Unbilled Revenue Processing > Create unbilled revenue initial journal entry.
  3. On the Unbilled Revenue Mass Processing page, create the journal entry.

    4. Tip: This window can also be used for creating journal entries for several billing schedules.

  4. To create sales orders and post the invoices for the billing schedules, use the Invoice Creator page.
  5. After the invoices are posted, you can review the audit information on the Renewal tab of the Billing Schedules page.

Milestone billing: The milestone billing functionality can work with the unbilled revenue feature with the following conditions satisfied:

  • When the milestone parent item is unbilled (the Unbilled revenue check box is selected) and the milestone child items are not unbilled (the Unbilled revenue check box are cleared) , the start and end dates for the parent item must be specified. These dates are used for creating the initial journal entry.
  • When the milestone parent item is unbilled (the Unbilled revenue check box is cleared) and the milestone child items are not unbilled (the Unbilled revenue check box are selected), the end date for only the child items for which you want to create the initial journal entry must be specified.
    Each milestone child item can be processed separately and the end dates can be specified when you are ready to create the initial journal entry.

Note icon. Note: If the initial journal entry for the milestone parent or child items has already been created or an invoice has been created, the start and end dates cannot be edited.

Unbilled Revenue with Straight Line Deferrals

To use the unbilled revenue feature with straight line deferral schedules, follow this general workflow:

  1. On the Billing Schedules page, create a billing schedule as usual.
  2. Add an item to the Billing schedule lines.
  3. If the item is not already a deferral item or you want to change the default values, select Advanced Deferrals action for the line. On the Transaction Deferral page, do the following: 
    1. Set Deferred to Yes.
    2. Change the Accounts as needed.
    3. In the Schedule section, select Straight line, and edit other values as needed.
    4. Select OK.
  4. If the item is not already set up to use the unbilled revenue feature, or if you want to change the default settings, select the Unbilled revenue action for the line.
    1. Set Unbilled revenue to Yes.
    2. Select the accounts to use for the revenue and discount.
  5. For the billing schedule, select Unbilled Revenue Processing > Create unbilled revenue initial journal entry.
  6. On the Unbilled Revenue Mass Processing page, create the journal entry.

    7. The deferral schedule is created. You can review the details on the Schedulespage.

After the deferral schedule is created, you can edit various values for the billing schedule line item, for example, unit price, quantity, dates, etc. The deferral schedule is updated with the new values.

Unbilled Revenue with Event Based Deferrals

To use the unbilled revenue feature with event based deferral schedules, follow this general workflow:

  1. On the Billing Schedules page, create a billing schedule as usual.
  2. Add an item to the Billing schedule lines.
  3. If the item is not already a deferral item or you want to change the default values, select Advanced Deferrals action for the line. On the Transaction Deferral page, do the following: 
    1. Set Deferred to Yes.
    2. Change the Accounts as needed.
    3. In the Schedule section, select Event based, Template, Allocation type, and Expiration account.
    4. Select OK.
  4. If the item is not already set up to use the unbilled revenue feature, or if you want to change the default settings, select the Unbilled revenue action for the line.
    1. Set Unbilled revenue to Yes.
    2. Select the accounts to use for the revenue and discount.
  5. For the billing schedule, select Unbilled Revenue Processing > Create unbilled revenue initial journal entry.
  6. On the Unbilled Revenue Mass Processing page, create the journal entry.

    7. The deferral schedule is created. You can review the details on the deferral Schedules page.

After the deferral schedule is created, you can edit various values for the billing schedule line item, for example, unit price, quantity, dates, etc. The deferral schedule is recalculated based on the new values.

The distributions are recalculated based on the allocation type selected (Percentage , Percentage Completion, Equal Amounts). For the Variable amounts allocation type, the distribution is recalculated based on the percent equivalent of the initial value for the event. For example, the original unit price is 100.00, the percent of the initial value is 55.00, which is 55%. When the unit price is changed to 200.00, the variable amount of the event becomes 110.00, which is 55%.

Note icon. Note: If deferral schedule lines have been recognized, the billing schedule line item cannot be edited. If needed, the recognized lines must be reversed first, and then the billing schedule line can be updated.

Event-Based Termination or Hold with Adjustment

After a event line has been recognized, the billing schedule line can be terminated or put on hold with an adjustment. Review the following scenarios for terminating a billing schedule line before the invoice is created.

  • One event line is recognized

    • When the billing schedule line is terminated, an adjustment line is created in the deferral schedule. The deferral end date for the adjustment line will be the termination date.

  • The unrecognized event line does not have a deferral end date

    • When the billing schedule line is terminated, the termination date becomes the deferral end date for that event line.

  • The unrecognized event line has only the expiration date

    • When the billing schedule line is terminated, the termination date becomes deferral end date of the event line.

When putting a hold on a billing schedule line with Adjust schedule set to Yes, the deferral schedule lines are affected the same as described for terminating a billing schedule line.