Transferring Committed Revenue to Performance Obligations

If you switch to using multiple-element arrangements for revenue recognition, before you start recognizing revenue on performance obligations you must transfer revenue amounts that have previously been committed directly on source records to their corresponding performance obligations. This is so that each performance obligation has a record of how much revenue has already been recognized on its linked source records, and therefore revenue is not recognized more than once. If you have previously amortized costs directly on source records, those values will also be transferred.

You can run the transfer process for all revenue contracts, or for specific revenue contracts by filtering on a particular field such as Currency or Revenue Contract Number.

Warning:

If you recognize and commit revenue on performance obligations before running the Transfer Previously Recognized process, there is a risk that revenue is recognized more than once. You will need to take corrective action if this happens.

You must complete the setup for configuring multiple-element arrangements before transferring previously committed revenue. The following steps give an overview of the setup required, and explain how to run the transfer process:

  1. Identify the source objects that you want to include in multiple-element arrangements.
  2. Create settings and templates for these objects. See Additional Setup for using Multiple-Element Arrangements for more details on the setup required.
  3. Create the revenue contracts.
  4. For each revenue contract, create the performance obligations and the performance obligation line items linked to the source records. Performance obligations must have a valid template. See Managing Performance Obligations for details of how to quickly add performance obligations and line items to a revenue contract by using the Manage Obligations button.
  5. Allocate revenue to the performance obligations and ensure that the performance obligations are marked as Active.
  6. Decide on the cutoff date when you are going to switch to recognizing revenue using multiple-element arrangements. Only values from committed transactions with recognized dates on or before this date are transferred to the corresponding performance obligations.
  7. When you are ready to transfer the revenue values committed on or before the cutoff date, navigate to the Revenue Management Task Launcher tab then click the Transfer Previously Recognized link. To run the transfer process you must have permission to see the Transfer Previously Recognized page, and you must have read/write access to all the source records and performance obligations involved in the transfer.
  8. On the Transfer Previously Recognized page:
    • Enter a description, recognition date, and recognition period for the revenue recognition transactions that will be generated.
    • Enter the cutoff date. Any values from committed transactions with recognized dates after the cutoff date will not be transferred.
    • Select the legislation type that your revenue recognition process conformed to prior to switching to using multiple-element arrangements. For reporting purposes, your selection will be recorded on the resulting revenue recognition transactions.
    • If you want to process specific revenue contracts rather than all revenue contracts, select the field to filter on from the Revenue Contract Filter field, then supply the value you want to filter on for that field. For example, you can filter on revenue contracts for a particular currency, or revenue contracts that are active. See Transfer Previously Recognized Fields for more information.
  9. When you are ready to proceed, click Transfer. The transfer process creates separate "In Progress" revenue recognition transactions for each group/currency combination, and a revenue recognition transaction line per performance obligation for the sum of committed transactions on its linked source records. You are notified by email when the transfer process completes. It is important that you review the email for any errors before continuing with the next step.
  10. Go to the Revenue Recognition Transactions tab to review the transactions. Use the Transferred - In Progress list view if it is available.
    • If the transaction values are correct, go ahead and commit them.
    • If the transaction values are not correct, delete the transactions then make the necessary corrections (for example, this might involve editing Recognized to Date values on source records). Rerun the Transfer Previously Recognized process to create a new set of "In Progress" transactions. Review this new set of transactions and commit them if appropriate.
  11. When you have committed the transactions created by the Transfer Previously Recognized process, run revenue recognition on the performance obligations to include any cumulative catchup adjustments.

You can now run revenue recognition against performance obligations as your regular business process.

See Example of Transitioning to Multiple-Element Arrangements for a worked example.

Warning:

After committing the transactions created by the Transfer Previously Recognized process, if you rerun the process for any reason do not commit the resulting transactions because doing so will commit duplicates. You will need to take corrective action if this happens.