Enhanced interface

Recognize revenue when a contract line is invoiced

You can use a streamlined workflow that eliminates the requirement to defer revenue for a contract line. In this scenario, revenue is recorded to Billed Sales revenue when the contract line is invoiced.

Subscription	Contracts
Regional availability	Australia Canada South Africa United Kingdom United States
User type	Business user with admin privileges
Permissions	Contract: Add, Edit, List, View, Delete
Configuration	Set Enable revenue recognition on invoice to true in the Configure Revenue Management page.
Dependencies	This feature is only supported for contract lines where the Billing method is either "Fixed price" or "Quantity-based" with the "Variable" Quantity type. This feature is only supported for items with Item type = "Non-inventory" or "Non-inventory (sales only)". It is not supported for "Kit" items.
Restrictions	As revenue is not being deferred, contract lines with Recognize revenue on invoice = true cannot be included in MEA allocations.

About recognizing revenue on contract line invoice

Your Intacct administrator needs to configure the Revenue Management application to enable the ability to recognize revenue on invoice. When this option is turned on, Intacct displays the Recognize revenue on invoice field on contract lines.

When a user adds a contract line that does not need revenue to be deferred, the user selects the Recognize revenue on invoice checkbox on the contract line. When this option is selected, Intacct automatically assigns the "Recognize on revenue" revenue template to both revenue journals. This template indicates there's no revenue schedule or requirement for the user to post revenue separately.

Later when the contract line is invoiced, Intacct automatically posts the revenue. The contract line's journal balances will only display Unbilled, Billed, and Paid values for Sales revenue and Accounts Receivable.

Set up a contract line to recognize revenue when it's invoiced

Open an existing contract in Edit mode.
Add a termed or evergreen contract line as applicable. The contract line must have the following configuration:

Billing method = "Fixed price" OR Billing method = "Quantity-based" and Quantity type = "Variable"
The selected item's Item type = "Non-inventory" or "Non-inventory (sales only)"

In the Revenue section in the Contract line window, select the Recognize revenue on invoice checkbox.
Intacct automatically assigns the "Recognize on revenue" revenue template to both revenue journals.
Complete other contract line fields as applicable.
Save the contract line.

About the contract subledger posting activity

The contract line's revenue is automatically recognized when it's invoiced, so there's no revenue schedule viewable on the contract line. However, Intacct does build a revenue schedule in the contract subledger that's linked to the contract line's billing schedule.

Note the following about the subledger revenue schedule:

Any edits or changes to the contract line's billing schedule will be reflected in this revenue schedule.
Deleting an invoice clears the associated recognized revenue.
Reports based on the "Contract subledger links" report object may show data from this revenue schedule.

Reconcile with the General Ledger

Reports based on the "Contract subledger links" object will show values posted to Unbilled Deferred revenue. If you use these reports to reconcile to the GL, reconcile the Unbilled Deferred revenue values against the GL's Unbilled Sales revenue values for these contract lines.

The GL reports will also show additional reclass entries to Unbilled Sales revenue that are not included in reports based on the "Contract subledger link" object. Ignore the reclass entries when you reconcile using reports based on the "Contract subledger link" object.

Contract accounting flow example

The following is what you might see in the GL Trial Balance report. Note the values posted to Unbilled Sales.

Month	Event	Unbilled AR	Billed AR	Paid AR/Cash	Unbilled Deferred	Billed Deferred	Paid Deferred	Unbilled Sales	Billed Sales	Paid Sales
March	Save (Book) the contract line	Debit 1200						Credit 1200
April	Generate Invoice for the 1st quarter		Debit 300						Credit 300
	(System reverses Unbilled)	Credit 300						Debit 300
	Reclass on invoice								Debit 300 Credit 300
	Recognize on invoice							Debit 300 Credit 300
May	Receive payment		Credit 300						Debit 300
	(Posts to payment accounts)			Debit 300						Credit 3000
	Balance	900	0	300	0	0	0	900	0	300

The following is what you might see in a report based on the Contract subledger links object. Note the values posted to Unbilled Deferred.

Month	Event	Unbilled AR	Billed AR	Paid AR/Cash	Unbilled Deferred	Billed Deferred	Paid Deferred	Unbilled Sales	Billed Sales	Paid Sales
March	Save (Book) the contract line	Debit 1200			Credit 1200
April	Generate Invoice for the 1st quarter		Debit 300						Credit 300
	(System reverses Unbilled)	Credit 300			Debit 300
	Recognize on invoice							Debit 300 Credit 300
May	Receive payment		Credit 300						Debit 300
	(Posts to payment accounts)			Debit 300						Credit 300
	Balance	900	0	300	900	0	0	0	0	300