Revenue Recognition - Update Rev Rec Periods After Service Activation

[former_member587702]

High-level scenario 1 is we sell a service contract to a Reseller/Contractor who eventually sells the contract to an end-user. The Reseller/Contractor is billed in advance and revenue recognition is required. Revenue recognition should begin once the end-user activates the service. We also have the scenario 2 where we sell the service directly to the end-user and it's activated immediately, and rev rec can begin immediately.

Typical sale could be an annual service contract for $1200 per year, and after the service is activated we recognize $100 of revenue per month. We could sell the service in July and activation could be in Sept. In this case the billing plan would be setup based on the sale date (07/2021 thru 06/2022) - see screen shot below. Again, we'd start rev rec in Sept when the end-user activates the service.

We're using a standard contract with a periodic billing plan and monthly pricing for the original sale. Problem with scenario 1 is the rev rec periods are defined based on the contract billing plan start/end dates, and the billing plan dates can't be adjusted after billing. And we haven't figured out a way to adjust the rev rec start date after the the end-user activates the service.

We're using standard ECC with no add-ons.

Any recommendations on an approach would be greatly appreciated.

Contract Billing Plan:

- Rev Rec Periods would be monthly between 07/2021 thru 06/2022.

- Actual rev rec would start some time after 07/2021.

- We'd like to use standard rev rec tcode VF44 to recognize revenue.

- Thinking of using the contract "Installation Date" to indicate activation date.

- If the end-user never activates the service, we'd eventually set an activation start date to start rev rec.

- Another point is the contract could be for a longer term - 12 months, 18 months, 24 months, etc. Using a billing plan with monthly pricing aligns perfectly with calculating the correct price and it sets up the rev rec periods.

[former_member414131]

Dear Cahal,

your question is tagged with SAP Subscription Billing - from your description, it seems that you are referring to the general topic of Subscription Billing, not to the product SAP Subscription Billing.

Can you confirm this assumption?

If so, I would recommend to remove the tag SAP Subscription Billing, to get views from users familiar with the product your question actually refers to.

Thanks and best regards
Jonas