Page Comparison

...

Revenue Recognition on Fixed Price Cost Cards

In This section explains how to perform revenue recognition on fixed price cost contracts. Before we get into that though, in service delivery organizations , costs are typically a small amount relative to time amounts that for most organizations this will be an uncommon thing to come upon. Before getting into the details of how this works, we would highly recommend you consider one . Because of that some of the alternative approaches described further on in this article.discussed in the next section may result in better workflows for your organization than the one discussed here. 

1. Create a contract line item with a fixed price cost contract
2. Issue a milestone invoice for the cost contract amount. This will generate a deferred revenue balance.
3. Approve some cost cards on the contract. This will generate cost WIP.
4. Create a blank invoice
5. From the cost card review tab, include the cost cards from step three
   1. At this point you could actually issue the invoice to a client. But you don't want to do this. This will leave you with a deferred revenue balance.
6. Select all the cost cards and perform a write up/down adjustment to equal the cost contract amount
7. Go to the first tab of the invoice editor and apply the pre-payment balance created by the milestone in step two. You should consume the entire balance and end up with a zero dollar invoice.
8. Issue the invoice, but don't send it to the client

...