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How to Defer Invoicing / Revenue
Recognition Based on Customer
Acceptance (OM & AR)
Michelle Taylor
DARC Corporation
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DARC Lines of Business
• Production Support
• 24x7 Functional & Database
• Consulting Services
• Program Management, Functional, Technical,
Architecture
•
•
Organizational Change Management
Communications, Documentation, Training
•
Accelerators for Interfaces and Conversions
• Mergers & Acquisitions
• Global Consolidation
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Speaker’s Qualifications
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•
•
•
•
•
•
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Implementing Oracle Applications for over 14 years
Certified Expert Consultant, Oracle E-Business Suite R12 Supply Chain:
Order Management
Certified Implementation Specialist, Oracle E-Business Suite R12 Supply
Chain: Order Management
Certified Implementation Specialist, Oracle E-Business Suite R12 Supply
Chain: Inventory
Oracle Supply Chain Management R12.1 PreSales Specialist
Oracle Supply Chain Management R12.1 Sales Specialist
Oracle Financial Management R12.1 Sales Specialist
Certified Professional Consultant, Oracle E-Business Suite R11i Supply
Chain: Order Management
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Agenda
• Introduction
– Description, Benefits & Definitions
• Setup Steps
• Process Flow & Processes Review
– Acceptance Helpful Hints
• Revenue Recognition Overview
• Considerations
• Summary
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Description & Benefits - Customer Acceptance Based
Deferrals for Invoicing & Revenue Recognition
• Businesses have the requirement to DEFER Revenue
Recognition until receipt of a sales order shipment has been
formally acknowledged / accepted by a customer
• Benefits
– Reduce …
• Administrative Costs – Revenue Accounting Maintenance / Mgt
• Revenue Recognition inconsistencies (audit)
– Improve …
• Compliance to corporate governance regulations /
requirements
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Description & Benefits - Customer Acceptance Based
Deferrals for Invoicing & Revenue Recognition
• Customers have the requirement to DEFER Invoicing until they have
formally acknowledged / accepted the receipt of goods and / or
services from a sales order shipment
– Eliminates the need to manage / monitor the time lags between ship
date, transit time values & invoice date
• Benefits
– Reduce …
• Administrative Costs – AP Maintenance / Mgt (customer side)
• Administrative Costs – AR Maintenance / Mgt (vendor side)
– Improve …
• Overall customer service
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Definition - Acceptance Types
• Explicit Acceptance
– Can be record Manually or Programmatically
– Using the Order Information Portal (OIP) the sales order lines can be
marked as Accepted by an External or Internal (CSR) Customer
(separate setups required) to record acceptance explicitly
– Order Import / Process Orders API
– Notification if Acceptance done in AR Revenue Mgt> Revenue
Accounting form
• Implicit Acceptance
– Can ONLY be recorded Programmatically
– Revenue Contingency / Deferral Reason has to be defined with an Event
Attribute Date that has a value for Expire Days
– Implicit Acceptance Request Set – concurrent programs used to record
implicit acceptance
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Definition - Acceptance Deferral Types
• Pre-billing Acceptance
– Always tied to Invoicing Removal Event
• Defers Invoicing AND Revenue Recognition
– Can be Implicit or Explicit
– Sales Order Line Workflow process is held at Invoice Interface
Eligible – Pending Customer Acceptance
• Sales order line workflow status is reflected as Pending prebilling acceptance post ship confirm
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Definition - Acceptance Deferral Types
• Post-billing Acceptance
– Always tied to Customer Acceptance Removal Event
• Defers ONLY Revenue Recognition
– Can be Implicit or Explicit
– Sales Order Line Workflow process is held at Close Line Eligible
– Pending Customer Acceptance
• Sales order line workflow status is reflected as Pending postbilling acceptance post ship confirm
• Invoice generated but Revenue Deferred and held in the
Unearned Revenue Account until Acceptance is completed
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R12 Setup Steps
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R12 Setup Steps – Order Management
• Enable Customer Acceptance
– Customer acceptance can be enabled at OU level through OM
system parameter: Enable Fulfillment Acceptance – Y / N
– Once enabled the AR API is called to invoke the rules engine to
validate customer acceptance on every sales order line
• Enable function security within responsibilities’ menus
– Sales Orders: Fulfillment Acceptance
– Sales Orders: Update Acceptance Attributes
• Enable Folder Fields for Customer Acceptance – SO / QSO
– Order Organizers’ SOL Results tab
– Sales Order Forms Lines’ Regions - Others tab
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R12 Setup Steps – Order Management
• User Access to Order Information Portal (required to perform
Manual Explicit Acceptance)
– External User – Actual Customer User
– Internal User – CSR
• Otherwise Insufficient Privileges Error Message will be
displayed after clicking the Fulfillment Acceptance (B)
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R12 Setup Steps – Order Management – Customer
Acceptance Data Fields via Folder Tools
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R12 Setup Steps – Order Management – Customer
Acceptance Data Fields via Folder Tools
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R12 Setup Steps – Accounts Receivable /
Revenue Mgt – Create Revenue Contingencies
• Define Revenue Contingency / Deferral Reason
– Create Revenue Contingency / Deferral Reason (Acceptance
Name) via Receivables Revenue Management set ups
– Create Assignment Rule(s) to link the Revenue Contingency /
Deferral Reason (Acceptance Name) to – based on customer, site,
item, etc
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R12 Setup Steps – Accounts Receivable /
Revenue Mgt – Create Revenue Contingencies
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R12 Setup Steps – Accounts Receivable / Revenue
Mgt – Revenue Contingency Assignment Rules
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R12 Setup Steps – Accounts Receivable / Revenue
Mgt – Revenue Contingency Assignment Rules
• Revenue Contingency / Deferral Reason (Acceptance Name) and their related
Event Attributes can be defaulted during order creation when the AR API that
is called from OM (NOT Traditional Order Management Defaulting Rules)
─ If Enable Fulfillment has not been activated – the AR API will NOT be
called to invoke the related AR Revenue Contingency defaults EVEN IF
Assignment Rules (can be assigned to customer, site, item, etc) have been
setup
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Process Flow & Processes
Review
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Customer Acceptance Process Flow
SETUP
PROCESS
Set deferral reason(s)
in AR Revenue Mgt
Enable Fulfillment
Acceptance in OM
Acceptance attributes
can be defaulted or be
specified for SO line
Enter & Book
Sales Order
Process Acceptance
Yes
Acceptance
Required?
Automated process
Type of
Acceptance
Pre-billing
Pre or Post
Billing?
Implicit
No
Legend
Explicit
Pick Release & Ship
Confirm Material
Post-billing
AutoInvoice
creates
invoice
No
Expiration
Period past?
Yes
Process
Acceptance
(Conc Progs)
Normal Flow
(without Acceptance)
Pre-billing Flow
Post-billing Flow
Revenue Recognition
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Record Acceptance
(OIP/ Order Import)
R12 Process - Order to Cash
w/ Customer Acceptance
• Enter & Book orders that are subject to Customer Acceptance viewing / updating (if appl.) order line Acceptance Attributes
• Pick Release and Ship Confirm goods – view workflow line status
transition
– Pending pre-billing acceptance
– Pending post-billing acceptance
• Perform Acceptance / Rejection
– Implicit (Programmatic only) or Explicit (Manual via OIP or Order
Import / Process Order API)
• View Acceptance Details in SO line and / or in OIP> Order Status (T)
• View Invoice and Revenue Recognition acceptance related details
from AR / Revenue Mgt
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Pre-Billing Acceptance
with Explicit Process Description
• Pre-Billing Acceptance (Invoicing Removal Event)
– Sales Order Line in Pending pre-billing acceptance workflow status
post ship confirm
– Invoicing AND Revenue Recognition deferred
– Record Acceptance via Order Information Portal (OIP)> Order
Status (T) or Order Import/ Process Orders API [EXPLICIT]
– Line status transitions to Closed and line gets interfaced to AR
• The Acceptance Date is the Invoice Date in AR
• Could have different values for Ship Date and Invoice Date as
a result
– Invoice generation and Revenue Recognition happen consecutively
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Pre-Billing Acceptance
with Implicit Process Description
• Pre-Billing Acceptance (Invoicing Removal Event)
– Sales Order Line in Pending pre-billing acceptance workflow status
post ship confirm
– Invoicing AND Revenue Recognition deferred
– Record Acceptance via Implicit Acceptance Request Set - Based
on Event Attribute Expire Days data [IMPLICIT]
– Line status transitions to Closed and line gets interfaced to AR
• The Acceptance Date is the Invoice Date in AR
• Could have different values for Ship Date and Invoice Date as
a result
– Invoice generation and Revenue Recognition happen consecutively
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Sales Order Line BEFORE Ship Confirm
and Pre-billing Implicit Acceptance
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Sales Order Line AFTER Ship Confirm
but BEFORE Pre-billing Implicit Acceptance
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Sales Order Line AFTER Ship Confirm
but BEFORE Pre-billing Implicit Acceptance
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Pre-Billing Acceptance Sales Order Line
Workflow Status Diagram
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Post-Billing Acceptance
with Implicit Process Description
• Post-Billing Accept. (Customer Acceptance Removal Event)
– Sales Order Line in Pending post-billing acceptance workflow status post
ship confirm
– Invoice is generated in AR Revenue is held in Unearned Revenue
account – ONLY Revenue Recognition deferred
– Record Acceptance via Implicit Acceptance Request Set - Based on
Event Attribute Expire Days data [IMPLICIT]
– Line status transitions to Closed
– Upon Acceptance completion the Revenue Recognition reverses the
originally Unearned Revenue account assignment and debits the appropriate
Revenue account
• The Acceptance Date is the GL Date used for when the Revenue is
Recognized
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Post-Billing Acceptance
with Explicit Process Description
• Post-Billing Accept. (Customer Acceptance Removal Event)
– Sales Order Line in Pending post-billing acceptance workflow status post ship
confirm
– Invoice is generated in AR and Revenue is held in Unearned Revenue
account – ONLY Revenue Recognition deferred
– Record Acceptance via Order Information Portal (OIP)> Order Status (T)
or Order Import/ Process Orders API [EXPLICIT]
– Line status transitions to Closed
– Upon Acceptance completion the Revenue Recognition reverses the originally
Unearned Revenue account assignment and debits the appropriate Revenue
account
• The Acceptance Date is the GL Date used for when the Revenue is
Recognized
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Sales Order Line
Before Post-billing Explicit Acceptance
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Sales Order Line
Before Post-billing Explicit Acceptance
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Post-Billing Acceptance Sales Order Line
Workflow Status Diagram
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How to Manually Complete
Explicit Acceptance
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Actions (B) LOV (Header / Lines)
Actions LOV> Fulfillment
Acceptance (Select for Manual
Explicit Acceptance)
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OR Fulfillment Acceptance (B)
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Manual Explicit Acceptance via Order
Information Portal (OIP)> Order Status (T)
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OIP> Order Status (T)> Process
Manual Explicit Acceptance
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Confirmation of Manual Explicit
Acceptance in OIP > Order Status (T)
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OIP> Order Status (T) Reflecting Manual
Explicit Acceptance Detail Updates
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Sales Order Line Others (T) After Completing
OIP Post-Billing Manual Explicit Acceptance
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How to Complete Implicit
Acceptance
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Implicit Acceptance Request Set /
Concurrent Programs
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Sales Order Line Implicit Acceptance
Completed Indicator
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Helpful Hints - Implicit Acceptance
• Request Set contains two concurrent programs
– Generate Pre-billing Acceptance Program for Pre-billing, Implicit
Acceptance
– Revenue Contingency Analyzer for Post-billing, Implicit
Acceptance
• Implicit Acceptance Programs validate the Date inclusive of the Time
Stamp value for the related Event Attribute
– Event Attribute is Ship Confirm Date and Expire Day is 1
• Ship Confirm Date value is 17-FEB-2010 16:00:00
• The Implicit Acceptance Request Set will NOT process the
related sales order line record(s) for Acceptance until 18-FEB2010 16:00:00 or later
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Helpful Hints – Acceptance Management
Customer Acceptance Report
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Helpful Hints – Acceptance Management
Customer Acceptance Report – Sample Output
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Revenue Recognition
Overview
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Post-Billing Revenue Recognition BEFORE
Acceptance – AR Revenue Accounting
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Post-Billing Revenue Recognition BEFORE
Acceptance – AR Revenue Accounting
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Explicit Acceptance Completed via
the Order Information Portal
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Post-Billing Revenue Recognition
AFTER Acceptance – AR Revenue Accounting
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Post-Billing Revenue Recognition
AFTER Acceptance – AR Revenue Accounting
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Post-Billing Revenue Recognition
AFTER Acceptance – AR Invoice Distributions
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Pre-Billing AFTER
Acceptance – AR BPA Invoice View
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Considerations
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Considerations - Customer Acceptance Based
Deferrals for Invoicing & Revenue Recognition
• Requirement to complete Invoicing and / or Revenue Recognition
AFTER the sales order shipment is physically received/ formally
acknowledged / accepted
• Receivables / Revenue Management
– Revenue Contingencies / Deferral Reasons (Acceptance Names) cannot
be assigned to transaction lines that have deferred account rules
– Revenue Contingencies / Deferral Reasons (Acceptance Names) and their
related Event Attributes are setup in AR Revenue Mgt but enforced in
Order Management
– Continued on next slide…
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Considerations - Customer Acceptance Based
Deferrals for Invoicing & Revenue Recognition
• Continued
– Revenue Contingency / Deferral Reason (Acceptance Name) and
their related Event Attributes can be defaulted during order creation
when the AR API that is called from OM (NOT Traditional Order
Management Defaulting Rules)
• Based on Customer Acceptance being activated via the OM System
Parameter: Enable Fulfillment Y / N and the setup of Revenue
Contingency Assignment Rules
─ If Enable Fulfillment has not been activated – the AR API will NOT
be called to invoke the related AR Revenue Contingency defaults
EVEN IF Assignment Rules (can be assigned to customer, site,
item, etc) have been setup
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Considerations - Customer Acceptance Based
Deferrals for Invoicing & Revenue Recognition
• Order Management
– Once the system applies the Revenue Contingency, it will remain applied to the
Order Line till the user manually removes it from the Sales Order form
– Support for multiple Inventory item types – Standard, Service, ATO / PTO Model and
PTO Kits
• For Service, ATO / PTO Model and PTO Kits – Acceptance contingency is
defined at the parent level, child lines inherit acceptance information from the
parent
– Fulfillment Acceptance functions need to be added to menus
– Only supports Full Acceptance / Rejection for outbound order lines
– Ship Confirm Date is the only event attribute supported for the current release
– Fields of Earliest and Latest Acceptable dates are still only applicable to sales order
line scheduling calculations
– Does not apply to returns, internal orders or retro bill orders
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Summary
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Customer Acceptance Based Deferrals for
Invoicing & Revenue Recognition - Summary
• Contingency Definition / Deferral Reason (Acceptance Name) and
their related Event Attributes are setup in AR / Revenue Mgt and can
be defaulted during order creation as a result of the AR API that is
called from OM (dependent on additional setups)
• Folder functionality enables user access to Acceptance data details
on sales order lines
• Pre-billing deferral is tied to Invoicing and defers BOTH Invoicing and
Revenue Recognition
• Post-billing deferral is tied to Customer Acceptance and defers ONLY
Revenue Recognition
• Explicit and Implicit Acceptances are supported with standard
functionality (additional setups required)
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Questions?
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