Setting Advanced Revenue Management (Essentials) Preferences

Create Revenue Recognition Journals in GL

Provides a choice for posting revenue recognition and reclassification journal entries:

• Detail – NetSuite creates one detailed journal entry for all plans selected for revenue recognition posting and one to three entries for reclassification journal entry creation. The journal entries include separate lines for each plan, and each line posts separately in the general ledger.

• Summary – Revenue recognition and reclassification are summarized for posting. The summaries are based on matching attributes. For details, see Summarized Revenue Recognition Journal Entries and Summarized Reclassification Journal Entries.

Default Revenue Recognition Journal Date to

Select the default transaction date of revenue recognition journal entries when you open the Create Revenue Recognition Journal Entries page:

• Last Day of Period – The date defaults to the last day of the period you select in the Posting period field.

• Current Date – The date defaults to the current date.

Default Deferred Revenue Reclassification Account

Arrangement level and sub-arrangement group level unbilled receivable adjustments require that you select a default deferred revenue account.

Use System Percentage of Completion for Schedules

This preference is available with the Advanced Revenue Management (Essentials) feature only when one or more of the following features are also enabled:

• Project Management

• Revenue Recognition

• Amortization

Advanced Revenue Management (Essentials) ignores this preference except when you use a Project Revenue Rule on the Financial subtab of the project. Project completion is calculated automatically, based on approved time logged against the project.

If you are using Project Revenue Rules, check this box to calculate project completion automatically, based on approved time logged against the project. Clear this box if you always want to enter cumulative percent complete values in the Percent Complete Override subtab on the project record. For more information about Project Revenue Rules, see Project Revenue Recognition.

To bypass automatic calculation, enter values for Period and Cumulative Percent Complete in the Percent Complete Override subtab on the Financial subtab of the project. For more information, see Percent-Complete Revenue Recognition Plans.

Revenue Arrangement Update Frequency

Select how revenue arrangements are synchronized with sales transactions.

• When you select Manual for this preference, to update revenue arrangements, you must go to the Update Revenue Arrangements and Plans page. This page is at Financial > Other Transactions > Update Revenue Arrangements and Revenue Recognition Plans. To start the process, click Update Revenue Arrangements.

  Use this option if you want to use filters to select the revenue elements and arrangements to update. For additional information, see Updating Revenue Arrangements.

  In OneWorld accounts, the subsidiary access of the logged in user determines which revenue elements and arrangements are updated.

• When you select Automatic, the system updates revenue arrangements every 3 hours.

  When revenue arrangements are updated automatically, administrator permissions are used and all revenue elements and arrangements are updated regardless of subsidiary restrictions in OneWorld accounts. If you use Multi-Book Accounting, the accounting book status is ignored.

  The Submission Status column may display Pending if the revenue arrangements are in queue.

Revenue Plan Update Frequency

Select how revenue recognition plans are synchronized with revenue arrangements.

• When you select Manual for this preference, two locations include a Update Revenue Plans button that starts the plan update process. You can click the button on an individual revenue arrangement record to update plans for a single arrangement. On on the Update Revenue Arrangements and Plans page at Financial > Other Transactions > Update Revenue Arrangements and Revenue Recognition Plans to can update plans for multiple revenue arrangements. This page includes filters to select the revenue plans to update. For additional information, see Updating Revenue Recognition Plans.

  In OneWorld accounts, the subsidiary access of the logged in user determines which revenue elements have their plans updated.

• When you select Automatic, the system updates revenue plans every 3 hours.

  When revenue recognition plans are updated automatically, administrator permissions are used and all plans are updated regardless of subsidiary restrictions in OneWorld accounts. If you use Multi-Book Accounting, the accounting book status is ignored.

  The Submission Status column may display Pending if the revenue plans are in queue.

Disable Creation of Forecast Plans

Check the box to suspend creation of revenue recognition forecast plans. When you clear the box, creation of forecast plans resumes. By default the box is clear. If you suspend forecast plan creation and resume it later, the generation of forecast plans may take longer than usual.

When you disable forecast plan creation, the Revenue Recognition Forecast reports omit forecasted lines.

Allow Gaps in Revenue Recognition Record Numbers

Check the box to permit gaps in record numbering for revenue elements and revenue recognition plans. Allowing gaps streamlines the process when executing large numbers of records. The box is automatically checked for new NetSuite implementations.

If you clear the box, gaps in the record numbers occur only when revenue elements or revenue recognition plans are deleted.

Default Revenue Arrangement Form

Select the system form to use for revenue arrangements. The options are Standard Revenue Arrangement plus any custom forms created during implementation.

Default Revenue Recognition Journal Entry Form

Select the journal entry form to use for revenue recognition journal entries. The options are Standard Journal Entry plus any custom journal entry forms created during implementation.

If you use workflows for journal entry approval routing, create a custom form for your system-generated revenue recognition journal entries. Exclude the custom form from your workflows, and select it as the value for this preference.

Default Reclassification Journal Entry Form

Select the journal entry form to use for deferred revenue reclassification journal entries. The options are Standard Journal Entry plus any custom journal entry forms created during implementation.

If you use workflows for journal entry approval routing, create a custom form for your system-generated reclassification journal entries and exclude it from your workflows. Then select that custom form as the value for this preference.

Default Deferred Cost Journal Entry Form

Select the journal entry form to use for the deferred cost journal entry. The options are the Standard Journal Entry plus any custom journal entry forms created during implementation.

If you use workflows for journal entry approval routing, create a custom form for this system-generated journal entry and exclude it from your workflows. Then select that custom form as the value for this preference.

Default Standard Revenue Recognition Rule

Select the revenue recognition rule to use by default for items.

Default Catch Up Period

Select the catch up period to use by default when an actual revenue plan that has been on hold resumes. When the hold is removed, this is the value that appears in the Catch Up Period field. You can change the value by editing the plan. The options for the default are as follows:

• Blank – You must set the Catch Up Period on the revenue plan.

• Current Period – This is the default for this accounting preference.

• First Open Period – The accounts payable close determines whether a period is closed.

Default Reforecast Method

Select the Reforecast Method to use by default for revenue forecast rules.

You must enter a value for the Recalculation Adjustment Period Offset field on revenue forecast rules that use the Manual for the Reforecast Method. For information about the Recalculation Adjustment Period Offset field, see Reforecast Method.

Use Transaction Date as Revenue Arrangement Date

Check this box to use the source transaction date as the date for the revenue arrangement. When a project is attached to a source line item, the source transaction date is used, not the project date. If the source date is updated after the revenue arrangement is created, the revenue arrangement date does not change. The following source transactions are supported for this preference:

• Sales order

• Return authorization

• Sales invoice

• Credit memo

• Cash sale

• Cash refund

• Journal entry

• Advanced intercompany journal entry

• Intercompany journal entry

Clear this box to use the system date when the revenue arrangement is created as the revenue arrangement date. This box is clear by default.

Use Subscription Billing Date as Revenue Arrangement Date

Check this box to use the Start Date in the subscription record header as the date for the revenue arrangement. If the subscription date is updated after the revenue arrangement is created, the revenue arrangement date does not change.

Clear this box to use the system date when the revenue arrangement is created as the revenue arrangement date. This box is clear by default.

This preference is available only when the SuiteBilling feature is also enabled.

Use Project Date as Revenue Arrangement Date

Check this box to use the source project date as the date for the revenue arrangement. This date is the Start Date in the Project Dates section of the project record. If the project date is updated after the revenue arrangement is created, the revenue arrangement date does not change. This preference applies to project revenue recognition configured for charge-based project billing, not to projects attached to transaction line items. For more information, see Project Revenue Recognition.

Clear this box to use the system date when the revenue arrangement is created as the revenue arrangement date. This box is clear by default.

This preference is available only when the Project Management feature is also enabled.

Require Invoice Approval When Revenue Plans Are Created on Billing

This preference applies only to revenue recognition plans that are created when the Create Revenue Plans On field is set to Billing.

Check this box if you use invoice approval routing and do not want revenue recognition plans to be created unless the invoice is approved. Clear the box is you want plans to be created when the invoice is created, regardless of the invoice approval status.

When you save your accounting preferences after turning this preference on or off, the evaluation and any revenue plan updates occur in the background. If you have a high number of unapproved invoices when you change the preference, the processing could be slow.

Unbilled Receivable Adjustment Journal Grouping

Select the grouping for reclassification of unbilled receivables. This accounting preference is book specific. When Multi-Book Accounting is enabled, it appears on the accounting book record instead of the Accounting Preferences page. The options are as follows:

• Element – The unbilled receivable adjustment is calculated for each revenue element. This is the default.

• Arrangement – The unbilled receivable adjustment is calculated for the revenue arrangement as a whole.

• Sub-Arrangement Group – The unbilled receivable adjustment is calculated for a group of revenue elements in an arrangement. The group is identified by the value of the Unbilled Receivable Group field on the revenue element. Revenue elements within the arrangement that have the same unbilled receivable group value are calculated together.

For details, see Groupings for Unbilled Receivable Adjustment Journal Entries.

Unbilled Contract Asset Account

Select the account to use for the unbilled receivable adjustment during reclassification. The default is the system unbilled receivable account. You may select any account with an account type of other asset or other current asset.

With Multi-Book Accounting, you cannot use global chart of accounts mapping for the system unbilled receivable account. Mapping of the system account is ignored. If you want to use global chart of accounts mapping, select a different account here.

Exclude Contract Assets from FX Reclassification

This preference is clear by default. If the box is clear, you cannot check it.

This accounting preference controls whether foreign currency revaluation for contract assets occurs during deferred revenue reclassification. When the box is clear, NetSuite includes foreign currency revaluation for the contract asset account in the reclassification process. The reclassification process uses the period-end currency exchange rate of the posting period to calculate contract assets. Reclassification creates an adjustment for foreign currency gain or loss on contract assets when a variance occurs. For information about the adjustment, see Foreign Currency Gain or Loss on Contract Asset

When the box is checked, reclassification does not include foreign currency revaluation for the contract asset account. The system records the exchange rate used by the first unbilled receivable adjustment journal entry for each revenue element. This fixed exchange rate is used to calculate all subsequent unbilled receivable adjustment journal entries for the revenue element. Any unrealized gain or loss due to exchange rate fluctuation is included in the period-end foreign currency revaluation for the unbilled receivables account. Deferred revenue balances may remain for foreign currency transactions after all revenue is recognized.

If you clear the box for this preference, you cannot check it again.

Create and Maintain Revenue Element upon Closed Order

This preference is checked by default. Closed sales orders and closed lines on sales orders are included in the revenue arrangement update process. If you create a sales order and then close it, NetSuite creates a revenue arrangement for that sales order. If you update a closed sales order, the revenue arrangement will update with the appropriate changes.

Clear this preference to exclude all updates to closed sales orders and closed lines on sales orders during the revenue arrangement update process. Whether closed lines are included in the revenue arrangement update process depends on when you close the line:

• If a sales order line is closed upon creation, a revenue element does not get generated for that sales order line. You must create journal entries to correct the deferred revenue.

• If a sales order line is open, billed, and then closed, the corresponding sales amount on the revenue element is updated to the invoice's quantity multiplied by the sales order's rate.

• If a sales order line or invoice line is updated after the sales order line is closed, its corresponding revenue element is not updated. You must create journal entries to correct the deferred revenue.

Number of Short-Term Revenue Periods

Enter the number of short-term revenue periods to include in the Deferred Revenue Waterfall report. Integers from 0 through 52 inclusive are valid values. The default is 12. Adjustment periods are included in the period count.

Enable Advanced Cost Amortization

Check this box to enable the accrual and amortization of eligible sales costs associated with the contract. When the box is checked, you record eligible sales costs on the revenue arrangement and revenue element. Amortization of these costs is tracked on the revenue recognition plan.

For more information, see Advanced Cost Amortization.

Contract Acquisition Expense Account

When Enable Advanced Cost Amortization is checked, you can select an account here for the default Contract Acquisition Expense Account in revenue arrangements.

Contract Acquisition Deferred Expense Account

When Enable Advanced Cost Amortization is checked, you can select an account here for the default Contract Acquisition Deferred Expense Account in revenue arrangements.

Contract Acquisition Expense Source Account

When Enable Advanced Cost Amortization is checked, you can select an account here for the default Contract Acquisition Expense Source Account in revenue arrangements.

When a revenue arrangement has a Contract Acquisition Expense Source Account, the deferred cost journal entry credits it instead of the Contract Acquisition Expense Account.

Create Revenue Elements for Subscription Revisions

Check this box to create separate revenue elements and revenue arrangements for each contract modification. (Contract modifications are called subscription revisions in SuiteBilling.)

You should check this box if you want to be able to review modifications before you merge them with your revenue arrangements. You cannot prospectively merge revenue arrangements that have subscription revenue plans unless this box is checked. For more information, see Setting the Optional Accounting Preference for Advanced Revenue Management in the SuiteBilling documentation.

You cannot clear this box after you have checked it.

When the box is clear, changes to subscription quantities, amounts, and dates automatically update the original revenue elements, even on approved revenue arrangements.

For details about using Advanced Revenue Management (Essentials) with SuiteBilling, see Revenue Recognition for SuiteBilling.

Number of Short-Term Expense Periods

Enter the number of short-term expense periods to include in the Deferred Expense Waterfall reports. Integers from 0 through 52 inclusive are valid values. The default is 12.

Default Deferred Revenue Account

Select the deferred revenue account to use by default for sales transactions. This account appears by default on item records. The default option is the system-generated Deferred Revenue account.

Default Intercompany Deferred Revenue Account

Select the account to use as the default value for the Intercompany Deferred Revenue Account on item records. The intercompany account is used to record transactions between subsidiaries in NetSuite OneWorld accounts. To be available for selection, an account must have the Eliminate Intercompany Transactions box checked. This preference is available only when the Automated Intercompany Management feature is also enabled. For more information, see Intercompany Accounts.