1. Order Management
  2. Billing and Invoices
  3. SuiteBilling
  4. SuiteBilling Overview
  5. Revenue Recognition for SuiteBilling
  6. Revenue Recognition Rules for SuiteBilling

Revenue Recognition Rules for SuiteBilling

Note:

The information in this topic applies regardless of whether you check the Create Revenue Elements for Subscription Revisions accounting preference except where the accounting preference is clearly identified.

NetSuite has the following default revenue recognition rules for SuiteBilling. You select revenue recognition rules on the item record. For more information, see Configuring Subscription Items for Revenue Recognition and Creating Items for Subscription Plans.

The following table shows the revenue recognition rules that correspond to the rate plans of the subscription line types:

Subscription Line Type

Revenue Recognition Rule

Recurring – Adjustable

Depends on the state of the Create Revenue Elements for Subscription Revisions accounting preference:

  • When clear, use Default Adjustable Recurring Fee

  • When checked, use Default Fixed Recurring Fee

Recurring – Fixed

Default Fixed Recurring Fee

One Time

Default Fixed Recurring Fee

Usage

Default Usage

Commit Plus Overage

Commitment:

  • Default Adjustable Recurring Fee – When revenue should be spread evenly but be based on each usage event

  • Default Fixed Recurring Fee – When revenue should be spread evenly regardless of the usage events created

  • Default Usage – When revenue should recognize only when a usage event has been created or is being consumed at the end of each period

Overage:

Default Usage

You can change the names of these default revenue recognition rules but not their settings. The default values for these fields are listed in the following table. For more information about the revenue recognition rules, see Revenue Recognition Rules.

Revenue Recognition Rule

Recognition Method

Amount Source

Rev Rec Start Date Source

Rev Rec End Date Source

Default Adjustable Recurring Fee

Straight-line, prorate first and last period (period-rate)

Event-Percent based on amount

Subscription Event Start Date

Subscription Event End Date

Default Fixed Recurring Fee

Straight-line, prorate first and last period (period-rate)

Event-Percent based on amount

Revenue Element Start Date*

Revenue Element End Date*

Default Usage

Straight-line, prorate first and last period (period-rate)

Event-Percent based on amount

Event Date

Event Date

*

To generate revenue plans using these values, you usually enter the Start Date and End Date in the revenue element. However, when the revenue element source is a subscription, these dates are automatically derived from the subscription lines. If the source is an evergreen subscription, there is not an end date, so the Estimated Revenue Recommended End Date field on the subscription header is used as the end date.

None of the default revenue recognition rules for SuiteBilling use Event-Percent based on quantity as the amount source. This amount source is not suitable for SuiteBilling.

When the credit memo does not contain a linked subscription charge, the revenue recognition rule for the item record is ignored. Instead, Advanced Revenue Management (Essentials) uses the rule you select with the Default Standard Revenue Recognition Rule accounting preference to generate the revenue plan for the credit memo line. For information about accounting preferences for revenue recognition, see Setting Advanced Revenue Management (Essentials) Preferences.

Usage service line types do not create revenue plans until the bill run executes because usage is not calculated until the rating process has run. Forecasting and reforecasting are not supported for subscription lines with usage. For information about reforecasting, see Recalculating Revenue Forecast Plans.

Recognition Treatment Rules for SuiteBilling

A recognition treatment rule defines the criteria that must match on a revenue element before NetSuite applies the recognition treatment. Each recognition treatment rule must specify a recognition treatment. The treatment rule look-up process evaluates the rules to determine whether to apply a recognition treatment to a revenue element.

For each treatment rule, the criteria can be defined by the following subscription line types:

  • Commit

  • Overage

  • One-Time

  • Recurring

  • Usage

When the treatment rules are set up, the item setup is overridden if the criteria match for each revenue element generated allowing for different treatment rules between each type of element generated.

Note:

When using commit plus overage subscription line types, it is key to use treatment rules with any rule except default usage.

Commit Plus Overage Charges

You can use the commit plus overage line type to charge in advance for x number of committed usage units per period at a specific price. Any additional units over the committed quantity at are charged at a different price as overage.

The commitment charge period and overage charge period can be different, such as an annual commitment with monthly overage. Overage cannot have a charge period greater than the commitment charge period.

Commit plus overage arrangements can be prospectively merged when using delta element functionality.

Related Topics

General Notices