Upload
buikhue
View
215
Download
0
Embed Size (px)
Citation preview
Copyright © 2016, Oracle and/or its affiliates. All rights reserved. |
Revenue Recognition: Sales Order Management, Contract and Service Billing Changes Are Coming [CON6802]
Robert Monahan, VP Product Management David Scott, Senior Principal Product Manager JD Edwards September 19, 2016
Copyright © 2016, Oracle and/or its affiliates. All rights reserved. |
Safe Harbor Statement
The following is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functionality described for Oracle’s products remains at the sole discretion of Oracle.
3
Copyright © 2016, Oracle and/or its affiliates. All rights reserved. |
Program Agenda
Business problem
Solution
Invoicing Enhancements
Contract and Service Billing and Project Costing Enhancements
Capabilities – Current and Planned
Summary
1
2
3
6
5
4
4
Copyright © 2016, Oracle and/or its affiliates. All rights reserved. |
Program Agenda
Business problem
Solution
Invoicing Enhancements
Contract and Service Billing and Project Costing Enhancements
Capabilities – Current and Planned
Summary
1
2
3
6
5
4
5
Copyright © 2016, Oracle and/or its affiliates. All rights reserved. |
Business Problem
• Currently revenue recognized when invoice is posted to G/L
• Business processes and industry standards require the recognition ofrevenue separate from the invoice process
• New Revenue Recognition Standard to be in effect in January 2018– Convergence of IFRS and US GAAP revenue recognition standards
– Common standard from the International Accounting Standards Board (IASB) and theFinancial Accounting Standards Board (FASB)
– Replaces all existing revenue recognition standards
– All industries and countries• Exceptions are the Insurance and Lease Vendor industries
6
Copyright © 2016, Oracle and/or its affiliates. All rights reserved. |
Revenue Recognition Accounting Standard – High Level
The core principle as stated from IFRS is to
“Recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled
to exchange for those goods or services.”
1. Identify the contract(s) with the customer 2. Identify the separate performance obligations 3. Determine the transaction price 4. Allocate the transaction price 5. Recognize revenue when a performance obligation is satisfied
7
Copyright © 2016, Oracle and/or its affiliates. All rights reserved. |
It Comes Down To:
8
Actual Revenue Performance Liability Account
Performance Obligation X Performance Obligation
Copyright © 2016, Oracle and/or its affiliates. All rights reserved. |
Over the Counter Sales Use Case
• Goods or services are received
• Payment made at the point of sale
• Transactions finalized in ERP system
9
Copyright © 2016, Oracle and/or its affiliates. All rights reserved. |
Over the Counter Sales Use Case
Customer purchases widgets at a retail store
Customer takes possession of the widgets and pays for them at the store
July 3
Performance Obligation Satisfied
10
Copyright © 2016, Oracle and/or its affiliates. All rights reserved. |
Over the Counter Sales Use Case
Customer purchases widgets at a retail store
Customer takes possession of the widgets and pays for them at the store
Invoice created for transaction
July 3
Performance Obligation Satisfied
11
Copyright © 2016, Oracle and/or its affiliates. All rights reserved. |
Over the Counter Sales Use Case
Customer purchases widgets at a retail store
Customer takes possession of the widgets and pays for them at the store
Invoice created for transaction
Revenue and COGS amounts booked
July 3
Performance Obligation Satisfied
Revenue and COGS
Recognized
12
Copyright © 2016, Oracle and/or its affiliates. All rights reserved. |
Over the Counter Sales Use Case
Customer purchases widgets at a retail store
Customer takes possession of the widgets and pays for them at the store
Invoice created for transaction
Revenue and COGS amounts booked
Payment created for transaction
July 3
Performance Obligation Satisfied
Revenue and COGS
Recognized
13
Copyright © 2016, Oracle and/or its affiliates. All rights reserved. |
Over the Counter Sales Use Case
Customer purchases widgets at a retail store
Customer takes possession of the widgets and pays for them at the store
Invoice created for transaction
Revenue and COGS amounts booked
Payment created for transaction
July 3
No Changes Required to Current Business Process or
Accounting Entries
Performance Obligation Satisfied
Revenue and COGS
Recognized
14
Copyright © 2016, Oracle and/or its affiliates. All rights reserved. |
Shipping of Goods to Customer Use Case
• Sales Order for goods that will be shipped a longdistance to the customer
• Customer is invoiced at the time of shipment
• Customer takes advantage of the discounts availableand pays prior to receiving the shipment
15
Copyright © 2016, Oracle and/or its affiliates. All rights reserved. |
Shipping of Goods to Customer Use Case
Agreement made between supplier and
customer for the sale of widgets
July
16
Copyright © 2016, Oracle and/or its affiliates. All rights reserved. |
Shipping of Goods to Customer Use Case
Agreement made between supplier and
customer for the sale of widgets
Sales Order Created
July August
17
Copyright © 2016, Oracle and/or its affiliates. All rights reserved. |
Shipping of Goods to Customer Use Case
Agreement made between supplier and
customer for the sale of widgets
Sales Order Created
Widgets Shipped to Customer
July August
18
Copyright © 2016, Oracle and/or its affiliates. All rights reserved. |
Shipping of Goods to Customer Use Case
Agreement made between supplier and
customer for the sale of widgets
Sales Order Created
Widgets Shipped to Customer
Invoice created
July August
19
Current Process -Revenue and COGS
Recognized
New Standard Performance Liability for
Revenue and COGS
Copyright © 2016, Oracle and/or its affiliates. All rights reserved. |
Shipping of Goods to Customer Use Case
Agreement made between supplier and
customer for the sale of widgets
Sales Order Created
Widgets Shipped to Customer
Invoice created
Customer pays the invoice
July August
Current Process - Revenue and COGS
Recognized
New Standard Performance Liability for
Revenue and COGS
20
Copyright © 2016, Oracle and/or its affiliates. All rights reserved. |
Shipping of Goods to Customer Use Case
Agreement made between supplier and
customer for the sale of widgets
Sales Order Created
Widgets Shipped to Customer
Invoice created
Customer pays the invoice
Supplier receives payment
July August
21
Current Process - Revenue and COGS
Recognized
New Standard Performance Liability for
Revenue and COGS
Copyright © 2016, Oracle and/or its affiliates. All rights reserved. |
Shipping of Goods to Customer Use Case
Agreement made between supplier and
customer for the sale of widgets
Sales Order Created
Widgets Shipped to Customer
Invoice created
Customer pays the invoice
Supplier receives payment
Customer receives widgets and notifies supplier they have
accepted them
July August September Performance
Obligation Satisfied
22
Current Process -Revenue and COGS
Recognized
New Standard Performance Liability for
Revenue and COGS
Copyright © 2016, Oracle and/or its affiliates. All rights reserved. |
Shipping of Goods to Customer Use Case
Agreement made between supplier and
customer for the sale of widgets
Sales Order Created
Widgets Shipped to Customer
Invoice created
Customer pays the invoice
Supplier receives payment
Customer receives widgets and notifies supplier they have
accepted them
Performance Liability is cleared and the Revenue and COGS amounts are
booked
July August September
New Standard Revenue and
COGS Recognized
23
Current Process - Revenue and COGS
Recognized
New Standard Performance Liability for
Revenue and COGS
Performance Obligation Satisfied
Copyright © 2016, Oracle and/or its affiliates. All rights reserved. |
What should I do next?
• Talk with your internal financial team/auditors/advisors
•Review periodicals to stay current
•Analyze your company's revenue related transactions against new standards
• Learn how the JDE software enhancements will enable this change
24
Copyright © 2016, Oracle and/or its affiliates. All rights reserved. |
Program Agenda
Business problem
Solution
Invoicing Enhancements
Contract and Service Billing and Project Costing Enhancements
Capabilities – Current and Planned
Summary
1
2
3
6
5
4
25
Copyright © 2016, Oracle and/or its affiliates. All rights reserved. |
JD Edwards Revenue Recognition Solution
• Software changes are required!
• Updates available and planned
–EnterpriseOne 9.1, 9.2
–World A93.1 and A94
• Key challenges for revenue managers
– Identify customer contracts
– Identify the separate performance obligations
–Determine the transaction price
–Allocate the transaction price
–Recognize revenue when a performance obligation is satisfied (Our focus)
26
Copyright © 2016, Oracle and/or its affiliates. All rights reserved. |
Program Agenda
Business problem
Solution
Invoicing Enhancements
Contract and Service Billing and Project Costing Enhancements
Capabilities – Current and Planned
Summary
1
2
3
6
5
4
27
Copyright © 2016, Oracle and/or its affiliates. All rights reserved. |
Revenue Recognition Process Key Features
• Configure which invoices will go through the Revenue Recognition Process – A/R Invoices
– Sales Order Invoices
– Contract Billing Invoices
– Service Billing Invoices
• Performance Liability Accounting entries at invoice creation
• Recognize Revenue and Cost of Goods Sold separate from invoicing
• Reconciliation, Integrity Checking, and Audit of Revenue Recognition data
28
Copyright © 2016, Oracle and/or its affiliates. All rights reserved. |
Manage Invoices in Revenue Recognition Process
29
• Batch process to automaticallyrecognize revenue and COGS(based on a date)
• Workbench–Manage by exception– Review invoices in revenue
recognition process–Manually recognize actual revenue
and COGS (partially or in full)
Copyright © 2016, Oracle and/or its affiliates. All rights reserved. |
Program Agenda
Business problem
Solution
Invoicing Enhancements
Contract and Service Billing and Project Costing Enhancements
Capabilities – Current and Planned
Summary
1
2
3
6
5
4
30
Copyright © 2016, Oracle and/or its affiliates. All rights reserved. |
• Configure invoice-only transactions for revenue recognition (using triggers)• Summarize Unit Price and Lump Sum billing transactions by subledger• Allow adjustments for Stored Material for Lump Sum invoices• Reporting changes
• Ability to pass G/L Date from R48131 (invoice generation) to R48132 (revenuegeneration)
• Detailed revenue recognition posting report
Contract and Service Billing Key Features
31
Copyright © 2016, Oracle and/or its affiliates. All rights reserved. |
• Identify multiple performance obligations within a single job• Run Profit Recognition process by performance obligation• Make adjustments by performance obligation
Job Cost Key Features
32
Copyright © 2016, Oracle and/or its affiliates. All rights reserved. |
Project Costing
Job 1 – Executive Building Phase I - Excavation
Tower 1 excavation Tower 2 excavation
Phase II - Foundation Tower 1 foundation Tower 2 foundation
Phase III - Framing Tower 1 framing Tower 2 framing
% Complete Revenue Cost
RPO 1: Tower 1 % Complete Revenue Cost
RPO 2: Tower 2 % Complete Revenue Cost
Multiple performance obligations in a single job Revenue Performance Obligations (RPO): Tower 1 & Tower 2
One performance obligation for each job Performance Obligation: Executive Building
Job 1 – Executive Building Phase I - Excavation
Tower 1 excavation – RPO 1 Tower 2 excavation – RPO 2
Phase II - Foundation Tower 1 foundation – RPO 1 Tower 2 foundation – RPO 2
Phase III - Framing Tower 1 framing – RPO 1 Tower 2 framing – RPO 2
33
Copyright © 2016, Oracle and/or its affiliates. All rights reserved. |
Program Agenda
Business problem
Solution
Invoicing Enhancements
Contract and Service Billing and Project Costing Enhancements
Capabilities – Current and Planned
Summary
1
2
3
6
5
4
34
Copyright © 2016, Oracle and/or its affiliates. All rights reserved. |
Current (generally available) • Configuration to include or exclude invoices• Evaluation of configuration at all invoice entry
points• Recognize all, less, more, or none of the
revenue and/or COGS amounts• Remove an invoice from the process• Reverse a previous recognition• Batch and interactive process to add existing
invoices to process• Integrity checking and reconciliation of
Revenue Recognition Data
Planned • Audit Processes
Invoicing Process Enhancements
Copyright © 2016, Oracle and/or its affiliates. All rights reserved. |
Current (generally available)
• Configure invoice-only transactions for revenue recognition (using triggers)
• Ability to summarize Unit Price and Lump Sum contract billing transactions by subledger
• Ability to make adjustments for Stored Material for Lump Sum invoices
• Reporting changes – Ability to pass G/L Date from R48131 to R48132 – Detailed revenue recognition posting report
• Identify multiple performance obligations within a single project/job – Profit Recognition process by performance obligation – Adjustments by performance obligation
Planned
• Transition to new standard: Allow Profit Rec to run at a different level for jobs
• Calculate Project Final amounts (HA/HU Ledgers) and run Profit Rec by subledger
• Change requests for T&M and Fee billing lines • Track contract amounts related to change orders • Performance Liability Account amounts visible in
Contract Status Inquiry application
Contract and Service Billing/Project Costing Enhancements
36
Copyright © 2016, Oracle and/or its affiliates. All rights reserved. |
Program Agenda
Business problem
Solution
Invoicing Enhancements
Contract and Service Billing and Project Costing Enhancements
Capabilities – Current and Planned
Summary
1
2
3
6
5
4
37
Copyright © 2016, Oracle and/or its affiliates. All rights reserved. |
Summary
• These enhancements allow our customers to: –Comply with Revenue Recognition Accounting Standards and Business
Processes
–Minimize the impact on current business processes
–Minimize the impact on current users
–Utilize additional flexibility for our Contract and Service Billing and Project Costing modules
38
Copyright © 2016, Oracle and/or its affiliates. All rights reserved. |
Additional Information
• learnjde.com– Frequently Asked Questions
– JD Edwards Implementation Guides
– Tutorials
• Financial Accounting Standards Board (FASB) - link
• International Accounting Standards Board (IASB) – link
39