Revenue Management automatically allocates a revenue contract's Total Revenue value to its performance obligations in proportion to each obligation's standalone selling price (SSP). This is illustrated in Example Calculations.
Before you allocate revenue for a contract it is important that all the performance obligations on the contract are up-to-date. If you are using the native Salesforce pages to maintain revenue contracts and performance obligations, there are separate buttons for Update and Allocate. If you maintain contracts using the Manage Obligations button, both update and allocate are performed automatically whenever you save or update the contract. See the sections below for more details.
If you modify a contract or its performance obligations after revenue has been allocated, the Allocation Status field will display a message indicating that you need to allocate the contract's revenue again.
Using the Manage Obligations button on the revenue contract detail page
The simplest way to allocate contract revenue is when creating or maintaining contracts using the Manage Obligations button on the revenue contract detail page. This is because whenever you click Save or Update on the Revenue Contract - Manage Obligations page, all linked performance obligation line items are updated from their source records, each performance obligation is then updated from its controlling POLI
A performance obligation line item which is used to populate certain fields (such as Account and Description) on the parent performance obligation. A performance obligation might have separate controlling POLIs for revenue and cost values. for revenue values (and cost values if appropriate), and revenue is allocated across the contract.
From the revenue contract list view
You can quickly update performance obligations and allocate revenue for multiple contracts from the revenue contract list view. To do this:
- Display the Revenue Contract tab, then use the checkboxes on the left to select one or more contracts.
- Click Update Performance Obligations to update all the performance obligations in the selected contracts.
- Click Allocate Revenue to allocate revenue across all the selected contracts.
From the revenue contract and performance obligation detail pages
If you create or maintain revenue contracts and performance obligations using the native Salesforce pages (revenue contract detail page and performance obligation detail page), there are separate buttons for updating the performance obligations in a contract, and then allocating revenue across the contract:
- On the revenue contract detail page, load the contract you are interested in and click the Update Performance Obligations button to first update all the performance obligations in the contract. Then click the Allocate Revenue button to allocate revenue across the contract.
- On the performance obligation detail page, load the performance obligation you are interested in and click the Update Performance Obligation button to update it. (Any other performance obligations on the same contract are not updated.) Then click the Allocate Revenue button to allocate revenue across the whole contract.
Recognizing and Forecasting Revenue on Performance Obligations
Once revenue has been allocated, if a performance obligation's Ready for Revenue Recognition checkbox is enabled that record can be included in revenue recognition and forecasting processes.