Revenue Recognition SAP

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SAP R/3 SD REVENUE RECOGNITION BEST PRACTICEKnowledge DocumentVersion 1.4

SAP R/3 SD REVENUE RECOGNITION BEST PRACTICE

SAP AG 07/2005. All rights reserved.

KNOWLEDGE DOCUMENT(Based on R/3 Release 4.7)

Release: Version 1.4 from of July 2005

Issued by: SAP AG Neurottstrae 16 69190 Walldorf

SAP AG

File: RR_Best_Practice_Knowledge_Document_V1.doc

Page: 2Of: 91

Revenue Recognition - Best Practice Knowledge Document 1 2

Table of Contents

GENERAL RECOMMENDATIONS .........................................................................6 DESCRIPTION OF BUSINESS AREA.....................................................................82.1 2.2 2.3 2.4 The available methods include:............................................................................................................... 8 The trigger and impact of the methods are: .......................................................................................... 8 Typical Core Business Processes using the methods are: ..................................................................... 8 Business Process Specific Information ................................................................................................... 9

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IMPLEMENTING REVENUE RECOGNITION ....................................................... 103.1 Getting started R/3 SD Revenue Recognition...................................................................................... 10 Required releases and support packages........................................................................................................... 10 Supported processes in revenue recognition...................................................................................................... 10 Starting with customizing.................................................................................................................................. 12 3.1.1.1 Global informations ................................................................................................................... 12 3.1.1.2 Presteps...................................................................................................................................... 12 Customizing FI accounts and their settings ....................................................................................................... 14 3.1.1.3 Unbilled receivable account and deferred revenue account....................................................... 14 3.1.1.4 Revenue account........................................................................................................................ 18 SD-Customizing ................................................................................................................................................ 20 3.1.1.5 SD item-categories and their settings ........................................................................................ 20 3.1.1.6 Customizing revenue recognition type on item category level .................................................. 22 3.1.1.7 Customizing revenue recognition accrual start date .................................................................. 24 3.1.1.8 Account determination............................................................................................................... 25

SAP AG 07/2005. All rights reserved.

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DESCRIPTION OF CORE BUSINESS PROCESSES ........................................... 274.1 Standard Revenue Recognition at time of billing................................................................................ 27 General Information .......................................................................................................................................... 27 Business steps overview and process description.............................................................................................. 28 Critical functions ............................................................................................................................................... 28 Variations of the process ................................................................................................................................... 28 Additional important information...................................................................................................................... 28 4.2 Time based revenue recognition (A) .................................................................................................. 29 General Information .......................................................................................................................................... 29 Business steps overview and process description.............................................................................................. 29 4.2.1.1 Process 2 time based with VF44 as first ................................................................................. 29 4.2.1.2 Process 3 time based with invoice as first .............................................................................. 30 Critical functions ............................................................................................................................................... 31 Variations of the process ................................................................................................................................... 31 Additional important information...................................................................................................................... 31 4.3 Service based revenue recognition (B)............................................................................................... 33 General Information .......................................................................................................................................... 33 Business steps overview and process description.............................................................................................. 33 4.3.1.1 Process 4 service based with VF44 as first............................................................................. 33 4.3.1.2 Process 5 service based with invoice as first .......................................................................... 34 Critical functions ............................................................................................................................................... 35 Variations of the process ................................................................................................................................... 35 Additional important information...................................................................................................................... 36 4.4 Service based revenue recognition (B) contract with call off........................................................... 37 File: RR_Best_Practice_Knowledge_Document_V1.doc Page: 3Of: 91

SAP AG

Revenue Recognition - Best Practice Knowledge Document

Table of Contents

General Information .......................................................................................................................................... 37 Business steps overview and process description.............................................................................................. 37 4.4.1.1 Process 6 service based with VF44 as first............................................................................. 37 4.4.1.2 Process 7 service based with invoice as first .......................................................................... 38 Critical functions ............................................................................................................................................... 39 Variations of the process ................................................................................................................................... 39 Additional important information...................................................................................................................... 40 4.5 Time based and billing related revenue recognition (D) .................................................................. 41 General Information .......................................................................................................................................... 41 Business steps overview and process description.............................................................................................. 41 Critical functions ............................................................................................................................................... 42 Variations of the process ................................................................................................................................... 42 Additional important information...................................................................................................................... 42 4.6 Time based revenue recognition in credit/debit memo processing with a credit/debit memo request 43 (A) General Information .......................................................................................................................................... 43 Business steps overview and process description.............................................................................................. 43 4.6.1.1 Process 9 time based with VF44 as first ................................................................................ 44 4.6.1.2 Process 10 time based with invoice as first............................................................................ 45 Critical functions ............................................................................................................................................... 46 Variations of t