Example: Consumption-based Revenue Recognition in RevRec
Does RevRec provide the revenue plan as per the unit consumption?
To recognize revenue based on unit consumption, you need to configure the Revenue plan as Proportional Performance. You can also upload in bulk from Sync or create the delivery logs manually. To illustrate an example of consumption-based revenue recognition use an example of providing professional services at a fixed hourly rate by creating 1 yr SaaS subscription sold bundled with professional services.
In order to ensure revenue for the services sale is recognized as incurred we will configure the SSP revenue recognition rule for Professional Services to use the "Proportional Performance" revenue recognition method. Once a performance obligation is marked as either being recognized via proportional performance or percent complete a Service Delivery panel shows up on the UI allowing you to manage the service delivery log for each contract. In addition, we will illustrate how you can bulk load your delivery logs into the system and RevRec will automatically assign the delivered units to each contract for you.
For example, we have created a SaaS product with the Revenue rule as Ratable and a Professional service product with the Revenue rule as Proportional Performance (used for consumption-based revenue recognition)
Once you have updated the revenue rule, you can create sales order items from Sales Order, update Customer, Product, and Units based on your business requirements
Once you create Sales Order Item, you will have the option to 'ADD NEW DELIVERY LOG'. Update the required details. This is where we update the service delivery log for each contract. You can add the delivery date and the units and click 'Save'.
RevRec allows you to add delivery logs in two different ways. You can add it manually also you can upload the list of contract logs which will automatically sync to the respective contract. You will find the format on how to fill in the delivery tails below. You can update the Log Date, Customer ID, Product Code and Units Delivered are the required fields in a sheet.
Navigate to Sync > Upload to update bulk delivery logs.
Once the sync is successful, you will find the uploaded delivery logs as shown below.
Then you can navigate from Customers > Sales Orders > Arrangements > Revenue Plan. Now you will see the graph and data with the unit-based consumption.
You can toggle the Graph button, to get the data respective to months.
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